State Benefits
ConorBrown
Member
Hi, would any of you guys have any guides or even CPD material on State Benefits. I am particularly looking for something that shows how an individuals benefits could be affected by taking a withdrawal or income from a bond or pension. I appreciate State Benefits is a convoluted area so any pointers for guides or websites etc would be much appreciated.
Comments
I have found this to be one of the most challenging aspects of the job. It is so difficult to establish how and when benefit entitlements can be impacted by advice on withdrawals. I tread very carefully and in previous employed roles have been burnt.
For information, Citizen Advice, Money Advice and Age UK are good starting points.
Hi Conor
I forwarded your question onto Martin Haggart our Technical Manager (Pensions) at Aegon who has responded as follows-
"_Age UK produces a very useful booklet on the subject of state benefits and the pensions freedoms which I have attached to this post. As with most things ‘pensions’ the rules are complicated and differ depending on whether the client or their partner is above state pension age (SPA). I’ve tried to summarise the position below.
Below SPA
If pension savings remain untouched then their value will be ignored in any means test.
Any income/annuity and PCLS paid out will be taken into account:
Income is taken at face value.
Capital (including PCLS taken) between £6000 and £16000 is deemed to provide a weekly income of £1 for every £250 above £6000. For example, if PCLS taken was £7500 that’d be £1500 over threshold and deemed to provide £6pw (£1500/£250) and would be taken into account.
If capital reaches £16,000 there’s no entitlement to state benefits regardless of income.
Where income and PCLS taken then client would be affected by both the income and capital rules.
Above SPA
For pension credit if pension benefits remain untouched then DWP will calculate a notional income equivalent to the annuity that could be bought from the pension pot.
Any income/annuity and PCLS paid out will be taken into account:
Income is taken at face value.
Capital (including PCLS taken) below £10,000 is ignored. If capital exceeds £10,000 it will be deemed to provide £1 weekly income for every £500 above £10,000. For example, if capital was £15,000 it would be deemed to provide an income of £10pw and it would be taken into account.
Where income and PCLS taken then client would be affected by both the income and capital rules.
Deprivation of assets
There are special rules to calculate notional income and capital where DWP finds a client has deliberately withdrawn and spent assets in order to be able to make a claim for state benefits, e.g. withdrawing to pay off debts wouldn’t cause a problem, but spending on luxury cruise definitely questionable!
_
Hope this helps.
Maxine Hayward
Thanks for the info, appreciate it.
A couple of handy links:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1174987/dmgch28.pdf
https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs91-pension-freedom-and-benefits.pdf
Quilter have a not bad webpage I look at from time to time - but we always confirm we're not SMEs and it's best checking with the relevant benefit provider. https://www.quilter.com/help-and-support/technical-insights/technical-insights-articles/how-state-benefits-are-affected/?concertinaId=concertina__link--128902-20