Cashing in a Pension Pot at 55 to buy a house while on benefits

[Chainey]

Hi all ... Hope this is the right place to post this.

 

Having lost everything in the recession I then suffered a major breakdown and now have Complex PTSD and fibromalgia amongst other illnesses which are all getting worse.

 

After two years of being homeless myself and my partner were given a council flat. Our neighbours are the local drug dealers and generally bad things happen daily. I now won't go out of the flat at all.

 

I have a pension which I could cash in in 18 months and I wanted to do this and buy a small cheap house.

 

I currently get PIP and my partner gets carers allowance and we get income support which I apparently claim for us both. I don't really understand it all as the CAB sorted it out for us.

 

If I did cash in my pension and buy a house would our income support stop.

 

Also would this affect my state pension when I get to retirement age. Someone told me that we wouldn't be entitled to pension credits.

 

Thanking you in advance for any advice you can give.

[Chainey]

Hi and thanks for the response.

 

I have already checked and would net at least £80K after charges.

 

I'm pretty certain we would lose the income support (or at least my part of it)

 

My biggest concern is whether at 65 pension tax credits would be affected.

[Chainey]

The rent is already paid by benefits so we would be saving them that outlay until we die ... It's not about investing in property it's about buying a home using the money I paid into a private pension for years for.

 

It seems that everywhere I look says it depends on what you drew your pension pot down for and spent it on. That is decided at the time by DWP as to whether you did it to claim extra benefits ... totally confused and stressed by all this

[Chainey]

Ain't that the truth!

 

I'm guessing that we would lose the income support but PIP and Carers allowance aren't means tested so although we wouldn't have any spare money, we could survive. I suppose my biggest worry is how we would survive on basic state pension with no Pension Credits if that's what happens :/

[Chainey]

I would think VERY carefully about doing it at 55

you lose soo much of the money in the pot

and in most cases, you'll need the providers consent [your ex employer]

 

wait till you are 60 then you don't have to ask nor lose out

most schemes allow that without penalty.

 

don't forget an unscrupulous IFA will do it for you at 55

but they make an absolute killing on commission too!

 

think about it.....

 

Hi and thanks

 

I've already checked all this out and it's fine .... Thing is the way my health is going I'm not sure I'll make 60. Spent all of my life trying to do the right thing and like I said, lost everything in the recession. I want to try to make the most of what time I have left

[Chainey]

OK, there are a few issues here. I'm not going to say whether or not I think it's wise to do what you propose, because I simply do not know the ins and outs of these things. But from a benefits point of view, here are the main things you need to consider.

 

1) You current entitlement to PIP and CA will not be affected, as you correctly note.

 

2) Your IS might be affected. You would need to declare the £80k sum to the DWP, and if you spent it on a house you would have to tell them that as well. They would then consider whether "Deprivation of capital" should apply in your case. If it did apply, they would treat you as still having the money and, since it's clearly more than £16k, would stop your IS. So the key question is "Is it deprivation of capital to use a lump sum payment to buy a house that will be your primary residence?" I'm not 100% sure.

 

You could ask the IS department. If they tell you that it's OK then it is OK because the rules state:

 

 

 

Otherwise each case is considered on its merits. They will look at how you spent the money, and whether you did so with the intention of securing or increasing entitlement to means tested benefits. That's the part of the rule that's often forgotten - it does not sound to me like you are considering buying a house solely so that you can continue to receive IS, but I'm not and never was a Decision Maker, and that's the person who makes the call. Considering worst case scenarios, you should plan for the possibility that your IS will stop and decide whether you could manage without it if necessary.

 

3) Future pension entitlement. Your contributory State Retirement Pension will not be affected. State Pension Credit is not likely to be affected either. They'd have a hard time claiming that you bought a house specifically to increase your SPC entitlement when 10 years have passed since the purchase. If they applied deprivation rules there and you appealed, the Appeals Tribunal would laugh the DWP right out the door and find in your favour.

 

Thank you so much for a few things in that post ... as always, when I use CAG I do make a donation that I can afford

[Chainey]

thanks so much for the info about seeing a local MP

[Chainey]

I know .... we've been doing lots of research on that too and we are priced out of most of the country ... but there are still pockets here and there.

 

We have also looked at moving to Gran Canaria where the climate would be perfect for many of my health problems.

 

I do know for sure though that I would lose the mobility aspect of PIP and also income support.

 

My other half would therefore have to find some way of earning an income from home, in between caring for me.

 

I'm almost sure we would lose pension credits too and have to take out health insurance so it's probably not doable.

[Chainey]

Hi all

 

I hope someone can help me with this as I'm struggling to understand it. I'm 55 soon and want to draw down my pension pot to buy a house (lost ours in the credit crunch).

 

The company I'm with don't allow that but they also don't charge for me to transfer it elsewhere.

 

They have just sent me a statement and transfer out form.

 

It says Current Value available for transfer £121K

Value of GMP £88K

 

Which is the amount I will get

[Chainey]

I know we will have to pay tax and see a financial advisor but I have also been advised that it will not affect our state pension.

 

I just don't understand which of the two amounts above is the one we will get before tax

 

We are currently living in a terrible council flat which is making my mental and physical illnesses worse. We HAVE to get out of here.

Edited September 24, 2017 by honeybee13
Removing unwanted comment in last sentence

[Chainey]

Please can someone help me :')

 

I have a defined benefit pension with DHL … they call it a money purchase with guaranteed minimum pension underpin.

 

I cannot access this pension when 55 or take any of the new options but I can transfer it out.

 

My current situation is that we lost everything in the credit crunch, became homeless for 2 years but still tried to continue the business.

 

An online hate campaign by a handful of florists, including death threats caused me to have a stress breakdown. This made me vulnerable and we were therefore housed in the worst council estate on Anglesey. It is so bad that they have now installed CCTV Cameras.

 

I am on PIP, my partner is my carer and we are on income support.

 

When I first realised how much was in the pension pot I spoke to the DWP and Income support. They confirmed that to completely draw down the pension to purchase a house would be fine and that we would only lose income support for the brief period that the funds were in my account.

 

My health continued to deteriorate both mentally but mainly physically and the only thing that has kept me going knows I could access this pension at 55 and buy a house.

 

Having a house with a workshop, which we have found would allow my partner to potentially start a business whilst still being on hand for me full time. The house also has a garden, which would be extremely beneficial to my health.

 

I know of all of the other options and this is the best one for us.

 

However one pension advisor was told he wasn't qualified to deal with this type of pension and so he passed it onto a comany called Pension Help but they have refused to do it.

 

I know there are legit companies out there who will do it but it's like trying to find a needle in a hay stack.

 

Please, please could someone help :'(

[Chainey]

Already been through pensionwise who couldn't advise because of the specific type of pension.

Also been through two pension advisors as mentioned above x