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Thread: JSA and pension lump sum

  1. #1
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    JSA and pension lump sum

    Hi

    I received paperwork this week to say that a pension I was paying into back in 1989 has reached payout time because I turned 60 a few weeks ago.
    The lump sum amount is £11,000

    I am now confused because I am in receipt of income based JSA with SDP and PIP enhanced rate on both sections.
    I have appx £400 in my bank account and no other income, I have a mortgage on my house with £10,200 outstanding.

    Does anyone know if I used the lump sum to finish my mortgage would it be deprivation, and does it mean I will lose all my benefits

    I am getting myself in a right state

    Many thanks

  2. #2
    Senior Member nukecad's Avatar
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    Can you clarify - is that JSA or ESA?
    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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    Quote Originally Posted by nukecad View Post
    Can you clarify - is that JSA or ESA?
    Yes its, income based JSA

    Thanks

  4. #4
    Senior Member nukecad's Avatar
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    Any pension lump sum, if/when taken, counts as savings/capital for Income Based benefits.
    (Unless it's a second or subsequent draw-down from a pension pot in which case they average it out as income).

    For any savings/capital that you have above £6,000 they will reduce your IB JSA by £1 for ever £250, or part of £250, over £6,000.
    So £11,400 is £5,400 over, which would mean that £22 would be deducted from your IB JSA.
    If your savings reduce or increase then the deduction will reduce/increase accordingly.
    If you savings go above £16,000 then IB benefits stop being paid.

    If you use savings to pay off a debt, such as a mortgage, before it is due to be (has to be) paid then the DWP will treat it as 'Deprivation of capital with a view to increasing benefits'.
    In which case they treat it as if you still had the money, they call this 'Notional Capital', and would still reduce your benefits by the £22.
    (They reduce the 'Notional Capital' by the amount deducted from your benefits, so it goes down over time).

    Normally if you could take money but chose not to then that would also be Notional Capital - but this does not apply to pension pots.
    With ESA (and I'm assuming its the same with JSA) if you can choose to defer a pension lump sum and don't take it until your State Pension Age then it does not count as Notional Capital and so does not affect your benefits.
    Last edited by nukecad; 15-01-20 at 09:12.
    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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    Thank you so much

    Apologies for late reply, i couldnt log in for some reason ??

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