Taking occupational pension taxand its impact on Jobseekers Allowance benefits
Q. I've been thinking about taking 25% of my occupational pension tax free and using it to pay off my mortgage. A friend has warned that it could affect my Jobseekers Allowance if I do. Is that correct?
A. If you are receiving Contributions Based Jobseekers Allowance then any savings you have or will be getting will not affect your benefit (although you haven’t specified if you get other benefits such as council tax reduction).
However, if you are receiving Income Based Job Seekers Allowance then this is a means tested benefit and you must declare if you receive any lump sum payments such as a pension payment if it takes your savings and capital to more than £6,000.
Capital of more than £6,000 would have some effect on Jobseekers Allowance and anything over £16,000 would cause the benefit to stop.
The Department for Work & Pensions (DWP) would want to know where the capital had gone and if they felt that you had intentionally deprived yourself of that capital in order to claim benefits then they can treat you as still having it in the bank.
The DWP will often accept paying off debts that are ‘immediately repayable’, so long as they do not believe that part of your intention was to increase your benefit entitlement, but they have had concerns about paying off mortgages where the amount is not due immediately and the capital could therefore have been used to supplement your own income as an alternative to claiming benefits.
Unfortunately, this there is no black and white answer and each case is decided on its own merits.
Q. I have claimed Disability Living Allowance for a number of years, but was recently transferred to Personal Independence Payment.
My personal care rate has stayed the same, but my mobility payment has gone from low rate to nothing at all.
I have submitted an appeal and it is currently with the Tribunal Service, but I am worried about losing the personal care component if I appeal.
A. When you appeal to the Tribunal Service they will make a decision on the whole claim including both the personal care and the mobility components.
They could put you back onto the mobility component and leave your personal care component as it is, but there is the also the chance that things could be reduced or stay the same.
You could benefit from speaking to a benefits adviser regarding your likelihood of success and whether or not you want to continue with the appeal or stick with what you have been awarded so far.