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Cashing in pension pot due to long term illness

(16 Posts)
LovelyBath77 Sat 18-Feb-17 21:47:16

DH has Crohns disease and is self employed. It is up and down due to the illness which he's had now for over ten years and he hasn't worked full time since. We get some tax credits.

He's 48 and recently got a letter about the private pension he has, said it could be a pot of around £85,000 and it wasn't what he had thought of years ago but there we go. It is what it is.

I was wondering about maybe he could cash it in sooner due to the illness and maybe pay off the mortgage which would give a bit less stress each month (there is around £75,000 outstanding on the mortgage).

Is it possible to do this and a good or bad idea?

Sunseed Sat 18-Feb-17 21:57:05

You can't access the funds in a private pension before age 55. If it was an occupational one and he was expected to retire early, permanently, due to ill health then he could if the scheme rules allowed.

And even if he was 55 now only 25% can be taken out tax free. The rest is taxable at his highest marginal rate, so very bad idea to take it all out at once as would have to pay higher rate tax on part.

Is he claiming all benefits he's entitled to?

LovelyBath77 Sun 19-Feb-17 16:31:44

OK, I see. We also get tax credits and it would probably affect that as well. He;s not claiming any benefits such as PIP as for now it is not affecting him the majority of the time which is the criteria. Also PIP is not very geared to conditions such as IBD unfortunately. Thanks for your reply. It may be something we look into in future depending on his health after age 55.

LovelyBath77 Sun 19-Feb-17 16:32:25

The mortage is due to be paid off that year anyway I think, in around 7 years. We will just have to manage till then.

wannabestressfree Sun 19-Feb-17 16:39:42

He needs to claim pip- it is a gate benefit and helps to claim others. I get it with crohns and work full time, I also get water sure tariff which he would be entitled to and other help.
I am also claiming my pension early as I have been told I can (teacher) but I have other life shortening complications.

wannabestressfree Sun 19-Feb-17 16:40:32

I am also staying at work and not retiring.

Kazplus2 Sun 19-Feb-17 16:45:10

You may also find that the pension has done guaranteed rights attached to it and that it is much more valuable as a pension than if cashed in.

wannabestressfree Sun 19-Feb-17 16:51:40

I agree like death in service for example...

LovelyBath77 Sun 19-Feb-17 17:11:19

Do you wannebee, that;s good to know. Glad you got it OK. Thing os his just is bad for flare ups, but that prevents full time work. I thought the criteria was it has to be the majority of the time rather than flare ups. I think his letters say it is generally controlled OK. He is on quite serious meds, methotrexate and was on humira but they stopped that as it responded well. Can I ask is yours controlled OK and it was still possible to claim, and do you might me asking is it due to having a stoma / surgery perhaps, as he has had neither of them. I am aware of the PIP process and many have to appeal as well, and would;t like that as is pretty stressful. Thanks.

LovelyBath77 Sun 19-Feb-17 17:11:32

Sorry for typos

wannabestressfree Sun 19-Feb-17 19:31:11

I have had a bag for the last five years and have never been in remission. Am seen at st marks as I have other issues and the side effects crohns treatments causes me have been numerous.
I often think it's the wording you have to get right for pip/ dla. I have a lifetime award. Message me if I can help x

LovelyBath77 Sun 19-Feb-17 20:36:36

I'm sorry to hear it's not been helped much, I have heard of St Marks. I can see how you would qualify. Kind thoughts. Mine is seeing consultant again next month and hope they will give humira again

AndNowItsSeven Mon 20-Feb-17 00:05:52

You dh should claim pip the criteria is 50% of the time not the majority of the time.

LovelyBath77 Mon 20-Feb-17 14:36:34

I claim PIP also, and know it is about support. He is also pretty independant in managing it so wouldn't qualify. The criteria are doing task safely, reliably and repeatedly for the majority of the time- wording they use.

AndNowItsSeven Mon 20-Feb-17 17:47:25

The dwp guidance is fifty percent of the time. The " majority of the time" relates to the days where the support is needed.

LovelyBath77 Tue 21-Feb-17 10:20:45

Ah Ok, sorry. I do claim it myself. Thanks for clarifying, the rules of PIP seem to be so complex.

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