Income Related ESA and a pension lump sum

[star cannibal]

Hi,

 

I'm on income related ESA and I have been offered a pension lump sum of just over £7k and then about £1k a year pension payments, if I choose to accept it yet,from an ancient Serps pension.

 

My thinking is that if I spent it down to £6k by replacing worn out white goods and keep the receipts I'd not lose any benefits due to the size of the lump sum?

I'm guessing that if the pension was paid to me £1k a year that the DWP would reduce my ESA by the same amount and I'd not see any of it due to it being classed as 'income' and the possible lump sum somehow not being income?

 

Will I be punished when (if) I reach pension age for 'deprivation of capital' or something like that?

 

I don't understand any of it and the DWP guidance is buried in about a million pages of Decision Makers Guides,and is hard to digest.

Any input would be much appreciated.

 

 

[unclebulgaria67]

Believe they ignore first £85 per week for private pension income, so the £1000 would not be deducted for. ( edit see correction below. The £85 per week disregard only applies to contributions based ESA)

 

In regard to the pension draw down of £7k which does not count as income, this would form part of your available svaings and investments.  Yes of course you can spend an amount on essentials.  So if you spent money on white goods as soon as received, if your savings and investments were less than £6k, you would not have to disclose for benefits.

 

But for Council Tax, I believe you have to disclose to Council, savings and investments exceeding £4k.

 

There is no deprivation issue in what you have stated.  That is where someone receives an amount of money and they decide to spend a large sum on something frivilous. 

 

Do you understand the changes to benefit entitlement when you reach state pension age ?  Have you had a benefits review from Citizens Advice to ensure you are claiming what you are entitled to and understand any changes in the years ahead.  If not, it might be worth it.

[star cannibal]

I thought that the ignored £85 per week pension income was for contribution based ESA?

[unclebulgaria67]

You are correct.  The £85 per week disregard does only apply to contributary based ESA.

 

For income based ESA, the weekly private pension amount is deducted in full from the ESA payment.

 

From the advice for Decision Makers guide published online.

 

Pension payments taken fully into account 51050 - 51059
Occupational pensions 51050 - 51051
Personal pensions 51052 - 51059
Occupational pensions
Treatment of occupational pensions in ESA(IR)
51050 Payments of income from occupational pensions should be taken fully into account subject to the
normal rules for calculating the amount of income to be assessed. Occupational pension schemes are set
up by employers to provide pensions for employees and their dependants. Payments under the
1. British Coal Voluntary Employment Redundancy Scheme or
2. British Coal Industrial Death and Retirement Scheme or
3. British Coal RMPS or
4. Armed Forces Pensions1
are included. Occupational pension payments do not include discretionary payments from a fund set up
to relieve hardship2. This type of payment is a charitable or voluntary payment.
1 CE/2265/2017; 2 ESA Regs, reg 2(1)

[star cannibal]

I guess I need to try and get this pension paid out on yearly lump sums if that's even possible,and skip the monthly payments.

[dx100uk]

go see a pensions advisor or CAB.as below advises

 

On 06/04/2022 at 17:28, unclebulgaria67 said:

Do you understand the changes to benefit entitlement when you reach state pension age ?  Have you had a benefits review from Citizens Advice to ensure you are claiming what you are entitled to and understand any changes in the years ahead.  If not, it might be worth it.

 

[star cannibal]

I'm only 55,state pension age is 67 for me.

Pension advisors appear to cost a lot of money to talk to so that's not going to be possible.

 

I tried Citizen Advice,was on hold for over an hour before speaking to a call handler,they were supposed to call me back within a couple of days but didn't.

I could ask the DWP for advice,but I doubt they'd be sympathetic.

 

I'll get in touch with the pension people and see if there are other options that don't lead to my pension payments being seized by the state.

 

[unclebulgaria67]

Is there any possibility that your health would allow you to find employment ?  If you could not commute to work, would you be able to work from home using a computer to provide customer service.  Many of the utility companies e.g. Sky TV, Virgin Media, Energy companies are offering working from home employment as Customer Service agents.

 

Suspect your local Job Centre could book an appointment to discuss the help available locally, if you wanted to look at options. 

 

 

 

 

[honeybee13]

You can get free pensions advice from money helper, it's a mix of various advisory bodies including Pensions Wise and the Pensions Advisory Service.

 

Free and impartial help with money, backed by the government | MoneyHelper

WWW.MONEYHELPER.ORG.UK

---

MoneyHelper: free and impartial help with money and pensions. Formerly Money Advice Service, The Pension Advisory Service and Pension Wise.

 

HB

[star cannibal]

Thanks for the link, I'll talk to them but I guess I'll have to keep in mind that they work for the government.

 

[honeybee13]

They're supposed to be independent. If it works well, they should be able to advise on pensions and also benefits.

 

It's the only source of free advice I'm aware of.

 

HB