ESA IR and tax free lump sum from pension

Please can you help me. My husband has been off sick for 9 years he is aged 50 and we get IR ESA and PIP and also HB and CTC

He has been offered the chance to take 25% lump sum from pension (able to access on medical grounds) which is just under £8000

I've just done benefits calculator and looks like if we get the £8000 he will lose all his ESA is this correct? We have debts amounting to the £8000 which we wanted to pay off.

Tracy wrote: Please can you help me. My husband has been off sick for 9 years he is aged 50 and we get IR ESA and PIP and also HB and CTC

He has been offered the chance to take 25% lump sum from pension (able to access on medical grounds) which is just under £8000

I've just done benefits calculator and looks like if we get the £8000 he will lose all his ESA is this correct? We have debts amounting to the £8000 which we wanted to pay off.

Hi T,

Any capital, assets and savings including the lump sum in excess of £6,000 will mean that deductions will be made pro-rata from your IR ESA entitlement/payment, as below:

Asset rule for receipt of IR ESA

If your capital, assets and savings are £16,000 or more this will totally preclude/stop any IR ESA payments.

See also : 24 hour work rule for payment of IR ESA

If he is also to receive a regular income from his pension, that will also be deducted £ for £ from his IR ESA entitlement/payment.

If you lose all IR ESA payments, that will also affect your automatic maximum entitlement to HB, CTC and you would also lose your entitlement to free prescriptions and dental care !!

If you are to take a lump sum/pension, you would have to inform ESA in writing, as well as your Council/LA who administer your HB and CTC.

Sending Documents to the DWP, ATOS, Capita or Maximus.

My best advice would be to obtain professional face to face advice before making a definite decision, see : This Topic

bro58

Hi thanks for replying so quick. I understand the savings rule but would this be classed as an income? We weren't going to access the rest it was to be put in a drawdown for the future but completely freaking out about this.

We've got a financial advisor who said because it was tax free we were fine just to be aware of the over 6000 threshold but when it goes in benefits calculator as pension income it removes ESA altogether

Hi so it would be classed as capital not income? We aren't accessing the rest so no income would be coming in?

The financial advisor said it's above just need to check.

Hi tracy
i was in a similar position to your husband and got a tax free lump sum from pension.
under the new pension rules you can take any amount you want( up to 25% tax free.)

so my advice to you would be only to take £5999 so that you remain under the £6000 threshold and pay 6000 off your debts.
i would inform dwp only when money received and send all relevant documentation to them.

You can then take the other 2000 in another tax year and pay the remainder of your debt off then.
if dwp then ask you where the other 6000 went you can send them the receipt for the debt that you paid off.

regards tango