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New Style Contribution based ESA and Occ Pension

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I was wondering if anyone could advise for a freind of mine please, At the moment she is on New Style contribution ESA but she is due to take a lump sum of her Occ Pension about 26k in December, from my understanding of  New Style contribution based ESA it is not means tested ie savings or imcome, but it also states: 

If you receive contribution-based ESA and have a gross pension income of more than £85 a week, the amount of benefit payable will be reduced by half of the excess.

The excess is the difference between £85 and the actual pension income. For example, for a pension income of £100, the excess is £15. The amount of ESA payable is reduced by half of that, which is £7.50


So how would this effect her New Style contribution ESA, would she then get nothing on reciving the lump sum.

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Lump sums from pensions are usually treated as capital savings.  It is regular monthly payments that would be treated as income.


BUT as always with anything benefit related, your friend should contact ESA with details of the pension lump sum being received and get their confirmation in writing. Suggest sending a letter to ESA with the pension document and the letter should confirm it is a lump sum and not regular income.


If ESA accept that the pension lump sum is to be treated as capital, your friend should keep a record of all the spending of her savings, as in the future they might be asked to show evidence that capital savings have not be run down in order to claim any income based benefits. This is thinking ahead to a time when any contributory benefits come to an end and your friend submits an application for means tested benefits.

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Hi  Again  



Going off the second part of your answer,

Could she pay her Mortgage off of about 16k with the Lump sum or would that be classed as running down her Capital/savings if she ever had to claim income based benefits.

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