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Thread: pension and esa

  1. #1

    pension and esa

    Hi I hope someone can help me as it appears no one at the DWP can, I desperately need to access just a couple of thousand pounds from a private pension that I have. Im allowed to access my pension from october to october. I have not accessed anything from it so far in this period but now am desperate. I need to know what the DWP will take it as, ie a lump sum or an income and backdate it as an income from october 2014 and then say that I owe them some money. I have had problems with this in the past so Im trying to be so cautious now as I dont want to get into trouble or have my benefits (esa and housing benefit cut). Any advice would be greatly appreciated.

  2. #2
    Senior Member
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    Didn't you have this problem before christineq?

    How was it resolved?

  3. #3
    Senior Member AmyS's Avatar
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    Hi, I believe it would be taken as income.

    A friend of mine is 57 and has a pension payout so her ESA is completely wiped out by her pension.

    Though of course I could be totally mistaken if it arrives as a lump sum. Though again it depends on the threshold you are on. I cannot have savings or my current account in credit over the amount of £6,000 because of ESA Support (Income Related).

    Whereas my mother can have up to £16,000.

    Someone wiser than me will come along to help clarify points for you.

  4. #4
    Senior Member Lighttouch's Avatar
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    Pension rules changed in April 2015

    You've probably heard all the fuss over pensions recently.

    Check this out http://www.theguardian.com/money/201...ns-mean-to-you

    Your income may affect your IR ESA or CBESA. Income can include savings over £6,000 and pension income.

    You won't qualify for IRESA if you have savings over £16,000

    https://www.gov.uk/benefits-calculators

  5. #5
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    Hi….can anyone help….
    I have just finished work on ill health retirement. I have been having contribution based ESA (support group) for a couple of years now.
    I have not had my pension yet but have been sent all the documents which requiring me to sign and to select. There is an offer as of which amount of Tax free lump sum I require from maximum permitted to minimum. But obviously my annual allowance would reduce the bigger the lump sum.
    I know about the CB ESA taking 50% over £85 but my thinking is the smaller the annual payments I get the less tax I pay also the less ESA they can deduct.
    I have informed the tax office and sea that I am taking ill health retirement and jobcentre has already sent out a ESA6 04/13 form where PART 1 there were 2 questions
    1/ did you and your partner choose to take regular income from the pension
    2/ is this the most you and your partner can get.
    So does taking the lesser annual pension make no difference by saying I could have excepted the larger one forcing me to pay more to ESA

  6. #6
    Senior Member Lighttouch's Avatar
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    Quote Originally Posted by edwolf88 View Post
    Hi….can anyone help….
    I have just finished work on ill health retirement. I have been having contribution based ESA (support group) for a couple of years now.

    I have not had my pension yet but have been sent all the documents which requiring me to sign and to select.

    There is an offer as of which amount of Tax free lump sum I require from maximum permitted to minimum. But obviously my annual allowance would reduce the bigger the lump sum.

    I know about the CB ESA taking 50% over £85 but my thinking is the smaller the annual payments I get the less tax I pay also the less ESA they can deduct.

    I have informed the tax office and sea that I am taking ill health retirement and jobcentre has already sent out a ESA6 04/13 form where PART 1 there were 2 questions
    1/ did you and your partner choose to take regular income from the pension
    2/ is this the most you and your partner can get.

    So does taking the lesser annual pension make no difference by saying I could have excepted the larger one forcing me to pay more to ESA
    What I'm gathering is that you want to take 25% tax free lump sum. Your actual pension is small and you can take it all in one go once a year e.g. £1000 PA

    The Tax Office want to know whether you are deliberately taking a big tax free lump sum so they have to pay more ESA. I guess they would prefer you took no lump sum and took it all as earned income so they don't need to pay as much ESA.
    I don't know the answer because if you took a big lump sum they could say you are depriving yourself of a monthly income so they will pretend your lump sum was income.

    You need to speak to PensionWise for guidance.

  7. #7
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    Sorry for not being very clear......No the tax people have been helpful and fine so far
    Yes I do believe its only the max of 25% tax free I can have from my pension So I will still be having a weekly/monthly income from my pension.
    Hopefully this will explain a little better…
    I had letter couple days ago from my LGPS pension scheme confirming that my ill health tier 1 has been confirmed by an independent doctor. It also gave the calculations of what I can accept.
    The calculations show that I can take from the highest acceptable tax free lump sum to the basic acceptable tax free lump sum. Calculations have been made on that every £1.00 I give from my annual basic pension would increase my lump sum by £12.00……..
    By taking the higher tax free lump sum would give me the lowest weekly pension income and vice versa.
    Weekly pension payments being
    highest £184 gross PW minus ESA ..50% of everything over £85 = £49.50 that could be taken from my ESA
    lowest £126 gross pw minus ESA ..50% of everything over £85 = £21.00 that could be taken from my ESA
    the form from the jobcentre about my ESA looks as though it wants to know which one I would be excepting for obvious reasons……….i know they cannot stop me excepting which one I want but can they take their highest amount of £49.50 from me even if I take the lowest

  8. #8
    Senior Member Lighttouch's Avatar
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    Quote Originally Posted by edwolf88 View Post
    Weekly pension payments being

    highest £184 gross PW minus ESA ..50% of everything over £85 = £49.50 that could be taken from my ESA

    lowest £126 gross pw minus ESA ..50% of everything over £85 = £21.00 that could be taken from my ESA

    the form from the jobcentre about my ESA looks as though it wants to know which one I would be excepting for obvious reasons……….i know they cannot stop me excepting which one I want but can they take their highest amount of £49.50 from me even if I take the lowest
    Well, if you are being retired on Tier 1 that means they don't actually worry if you work part time - up to 30 hours a week if you could.

    Next - any pension is considered as income so it's only right that they dock you accordingly. When I got my ill health pension four years ago I wasn't and still aren't eligible for any ESA benefits other than NI top ups which I don't claim for.

    Your pension is a final salary scheme pension which will also rise by whatever the CPI rate is in September. Presently it's below 0 as we're in a deflation period. - first time in decades!

    I also saved AVCs so could take them as a tax free lump sum.

    As I single income I can manage on my pension and DLA - having a lodger's income is the icing on the top.

    State Pension can't be drawn until you are about 66. You won't get a full state pension even if you've worked over 35 years as you opted out of SERPS that went towards your private pension. When you retire you would be getting a Universal State pension that would have been about £144 - you'll get about £90.

    If you have a mortgage/credit card debt you could use the lump sum to reduce or clear it. If you have savings put it in a NISA for tax free savings - I'm investing some in Stocks and Shares as the interest is higher.

    Depends on your health but you could still be around 20 years from now - don't expect that the Tories won't meddle with ESA - after the budget on 27 May Osborne may clobber ESA and you may not qualify for any - it's all a gamble.

    Once you decide you can't change your mind - lump sums once spent are gone - do a weekly budget to see how you and partner can manage on your pension.

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