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Thread: Claiming pension early, will ESA and PIPS stop?

  1. #1
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    Claiming pension early, will ESA and PIPS stop?

    Hi everyone, I'm after some advice if possible.

    I receive ESA (in Support Group) and I'm looking to move to be closerer to my daughter. I'm looking to buy a place outright as I can't work to pay a mortgage. However, the only way that I can afford to do this is by cashing in my private pension, which I can now do as I've just reached 55 and some proceeds from the sale of my current house. I will be using the full amount of my pension towards buying my new house. Please can you let me know if possible, by cashing in my pension, will I lose my benefit entitlement to ESA and PIPS?

    Thanks in advance.

    Max

  2. #2
    Senior Member nukecad's Avatar
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    Firstly your PIP will not be affected at all.

    For your ESA we need some more information.

    It's more important to know whether your ESA is Income Related or Contribution based, rather than what group you are in.
    If you are not sure about that then:

    If you could say how much ESA you currently get paid it's often possible to tell which one it is (although it could be a bit of both).

    If you could tell us the date when you first claimed ESA that could help work out if it 'Old Style' or 'New Style' ESA.
    New Style ESA is only ever Contribution Based.

    Do you currently have savings/capital of over £6,000, and if so are they over £16,000?
    You can't have IR ESA with savings/capital of over £16K.

    And lastly are you currently renting, and if so are you claiming Housing Benefit?
    You can't have HB with savings/capital of over £16K.

    What can be said for now:

    If it's entirely Contribution Based ESA then it won't be affected.

    If it's all, or partly, Income Related ESA, then it will be affected but that may not be a disaster.

    Your home is not counted as capital for IR benefits, and money from the sale of a home that is to be used to buy another home is not counted for 26 weeks to give you time to buy another property.
    However money from any other source is counted as capital, and so drawing a private pension to buy a home will affect IR benefits - until the home is purchased.

    Timing could be all important here, again depending on if your ESA is Income Related or Contribution Based or a bit of both.

    • If your ESA is wholy or partly Contribution Based then the ESA would continue. (But if it's partly CB and partly IR then it would reduce to just the CB part until you had bought the home, at which time you tell them you no longer have the money because it been used to purchase a home and get the IR part added back).
      .
    • If your ESA is entirely Income Related then it would stop when you got the money, but you would be able to reclaim once you have spent the money to buy a home.
      If you reclaim within a certain time you should be able to reclaim straight into your old Group without having to have a new WCA.

    So you can see that it's important to know just what type your ESA is.
    I don't know everything. - But I'm good at searching for, and finding, stuff.

    Migration from ESA to Universal Credit- Click here for information.

  3. #3
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    Hi nukecad, thanks for the advice. I first started receiving ESA in April 2020 I currently receive £114.10 per week (£228.20 paid every two weeks).

    I have looked at the award letter when I was told I was getting ESA and it states the payment of ESA is based on my National Insurance Contribution records, so does this mean that my ESA is contribution based?

    If this is the case am I right in thinking claiming my pension for my new house purchase will have no effect on my ESA and I will still carry on receiving it?

    Thanks

    Regards

    Max

  4. #4
    Senior Member nukecad's Avatar
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    The amount you are getting paid for ESA tells me that it's Contribution Based only. And the 2020 start date confirms that it's 'New Style' ESA which is only ever Contribution Based.

    So that's good news for you because it doesn't matter how much you have in the bank, CB ESA will still be paid at that rate.

    It does however beg the question as to whether you should also be claiming Universal Credit?

    And unless you have savings of above £16k, or a working partner, or some other income, then I'd say that you probably should be claiming UC as well. (Especially if you are renting where you live now).
    Your CB ESA would still be paid as it is now, what you get paid for ESA would be deducted from the UC payment but you'd still get extra money for the UC

    If you did claim UC then that would stop while the money to buy the house was in the bank but you could reclaim UC once the money had gone on the house.
    Your CB ESA would continue to be paid.

    In fact from what you have told us so far I'd say that (as long as your savings are not between £6k and £16k) you'd be at least £22.54 a week, £97.94 a month, better off if you claim UC. (and even more if you rent).

    Rather than ask you some more questions I strongly suggest that you use an online calculator to see what you should be entitled to claim, you could find yourself better off.
    https://www.gov.uk/benefits-calculators
    I usually use the Entitledto calculator.
    Last edited by nukecad; 14-01-22 at 20:22.
    I don't know everything. - But I'm good at searching for, and finding, stuff.

    Migration from ESA to Universal Credit- Click here for information.

  5. #5
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    Thanks very much nukecad for all your advice, it's really appreciated. I now feel miles better knowing my benefits will continue, when I move to my daughters. Thanks once again.

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