BENEFITS EXPERT: Will drawing my pension reduce my benefits?

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When I am 60 next year I will be able to draw my works pension of £1,000 a year. I am a woman, currently on Income Support and caring for my mother. If I take my works pension when I am 60 will it be deducted from my Income Support?

The principle of means-tested benefits, such as Income Support and Pension Credit, used to be that people would have their weekly income brought up to a set level, ‘topping up’ what they already had coming in. The higher your works pension, for example, the lower your means-tested benefit. It followed that, if someone had income that they chose not to take, they would be treated as having it whether they took it or not.

These rules changed in April 2015. From then people of 55 and over have more flexibility about how they use their money, such as private pension income. How your private pension pot is treated depends on whether you (or your partner) has reached the qualifying age for Pension Credit (PCQA). The qualifying age for Pension Credit is related to the date when a person would reach the State Pension age for a woman. If you are a woman aged 59, for example, you will reach State Pension age on your 66th birthday. As you have not yet reached PCQA your Income Support will not be affected before then if you choose not to take your private pension. If you choose to take any of it before PCQA it will affect your means-tested benefit, being treated as either income or capital, depending upon how you take it.

Once you reach PCQA, however, your pension will affect your Pension Credit whether you take it or not.

It is your responsibility to tell the DWP or Local Authority if you take any money from your pension pot.

Do we qualify for Council Tax Benefit? My husband’s State Pension has just risen to £112.56 a week, and mine is now £141.69 a week. His private pension is £194.64 a month. Our Council Tax has just changed from £98 to £91 a month.

By my reckoning you should be paying not much more than £30 a month after the deduction of Council Tax Benefit.

Is it true that, because I have been in a ‘contracted out’ pension scheme, I will now have to pay more in National Insurance.

People who were ‘contracted out’ of the State Additional Pension paid a lower National Insurance Contribution before 6 April. From then there will be no ‘contracted out deduction.’ With the Single Tier Pension there will be nothing to contract out of!