Renting into retirement - WIBU to spend my pension pot before age 67?

I totally agree with you, I've never claimed a bean myself, nor have my parents and siblings, when homeless I had to make my own luck, didn't even consider benefits.

HOWEVER as benefits exceeds income tax nowadays and people just rock up to this country and after saying they are gay or whatever get free housing, benefits, ultimately pension credits etc then why not milk the system too? Why be the only mug left paying in?

You might be happy to fund this behaviour. I'm not.

Has anyone mentioned UFPLS or Flexi Access drawdown? Or are all labouring under the illusion of her having to purchase a lifetime annuity?

Well quite. Even more reason to do what she suggests. She shouldn't be worse off for having saved the small amount she's managed.
People are acting like she's a wealthy person taking advantage of the system when in reality there's not a lot to distinguish OP from those that would be considered legitimately in need of those benefits, just a car and a couple of holidays. Only difference is others would have spent on those things earlier in their lives to end up with no savings.

They're not low, Full state pension is £12,547 p.a. I think that is a bloody good starting point before you start adding your own top up provision.

And yet everyone is up in arms that she might spend some of her approx £6k/year payout.

Either it's a a massive amount and she should be living off it, or its a paltry amount and she's not saved enough. Can't be both.

I don't blame you OP. Sounds like you have worked all your life. For me this is no more playing the system than what wealthy people do to legally avoid taxes and of course what you plan to do is legal. I would make sure you have your facts right though before you spend a penny.

Policy can change of course but at your age you are surely past any cutoffs for any major state pension policy changes. Those in most need should at least have enough for food and shelter which sounds like you will.

But she hasn't really saved. That's a very small pension pot for a 60 year old.

Gosh. Obviously morally this is wrong. Hopefully you'll get found out for deprivation of assets.

All tax evasion and benefit fraud is not OK. Just because big business evades tax doesn't mean it's OK for Janet in Hounslow to spend her pension then claim benefits.

I've made a huge amount of sacrifices to buy my house and have a pension. Turns out my mate who has done as she pleases all her life will get her rent and council tax paid for her. I'm a lefty but that just isn't right. My friend was quite capable but didn't want to.

depends what aspect of the game you want changed.

Someone who's paid rent all their lives, hasn't necessarily worked less hard than someone who has a mortgage. One will come to an end at some point and the other won't. Which means you will have rental costs until you die. That means the renter needs more to live on in retirement, that the homeowner.

So that does need accounting for surely?

And if you hate the game and want it changed there are a variety of accusations that are thrown at you.

I’m not sure how you plan to access the funds but remember you can only take 25% tax free initially.

For annoyed PPs (at plan to spend out) at least remember OP is still working and will have to pay tax and NI on anything she takes after the 25% tax free.

OP - really think about this, are there other plans? Could you use the 25% tax free as a deposit for a small flat somewhere? Then use the rest of the money to pay for the mortgage? Could you take a lodger in perhaps if you stretched for a 2 bedroom place? Maybe an older person like yourself. My MIL had to take a lodger in (always women only).

I wouldn’t ever want to plan my financial future based on benefits because they are always at the whim of political policy, political debate and the electorate.

If I were you OP (and I do understand) I’d be trying to find a way to use that lump sum to make a difference in my life, not to spend it so frivolously.

OP I don't think you'd be doing anything wrong. It's the system that penalises people who have attempted to make provisions for themselves and then leaves them no better off than those who don't. If they want to motivate people to ‘do the right thing’ then they shouldn't put you in this position. Sounds like you'd benefit in lots of ways by taking this approach, so I say do you and do it.

And another thing (not aimed at you - I am not assuming you have the answers)
If full state pension is higher than the pension credit rate, is it a big enough gap to make up for all those peripherals that the PC claimants get?

Looking at MoneySavingExpert What is Pension Credit and the eligibility criteria? – Money Saving Expert
These peripherals are substantial. Several hundreds, possibly more.

So if the gap between PC and full state pension is not big enough, would most pensioners actually be better off if they had not paid all their NI while working, got a lower state pension, and claimed PC instead?

I think the issue is that government, LAs, and others are using 'on PC' as a lazy shorthand for 'poor pensioners', whereas those who get full state pension (NI based) and no other income also poor, not really any better off.

How does this tie in with housing benefit?
A renter on full state pension will still need to claim housing benefit, surely? (and council tax benefit, even if a home owner)

I really don't think you should be giving smug responses like this to @nomas about how clever you are to blow your pension on a nice car and nice holidays and then sponge off other people. You may find that you don't get the last laugh in the future. It's pretty obvious that benefits will be cut in real terms (the state pension is a benefit) and also that younger people won't be receiving a state pension. Times are inevitably going to get harder.

People on full new state pension do not get Pension credit either unless they have additional premiums because they are disabled or a carer. the new state pension amount is a few pounds higher than the Pension credit threshold.

So the real question is: how much private pension do you need for it to be better than none?

A tiny pension on top of state pension means you don't get pension credit (the pensioners equivalent of universal credit). And it is pension credit that gives you peripheral perks like winter fuel payment, dental costs, TV licence, etc. ?
I can't see any other way in which getting more income makes you worse off, apart from losing these peripheral perks.

At what level of private pension does the balance tip to make it worth while? Has anyone done this calculation?

(Bear in mind though, that if you want to keep savings over the limit, you won't get pension credit anyway, even if your only income is the state pension.)

Thank you. I wish you well. This is what the Benefits system was designed to do - help people who actually need it, not lazy, piss-taking sods.

I suppose the only thing to be mindful of is is that you never know if they might change the rules how would you feel? If you’d spunk away the 86 grand and then next week they decided that you could’ve kept the £6000 afterwards after all?
That has happened several times throughout my lifetime to friends

You are, you'd need permission from the landlord though, which wouldn't be unduly witheld

Perhaps they will have tightened up the rules and you won't be entitled to all the benefits you hope for having frittered away your money.

Is every poster who is getting angry about this similarly angry about companies who pay no tax on 100s of millions of earnings or the rich who claim non residence? Billions are avoided…but this is a problem?

Isn’t the question:

Why are UK pensions so low?

No, it' s not allowed:

Deprivation rule

If you spend, transfer or give away any money that you take from your pension pot, DWPwill consider whether you have deliberately deprived yourself of that money in order to secure (or increase) your entitlement to benefits.
If it’s decided that you have deliberately deprived yourself, you will be treated as still having that money and it will be taken into account as income or capital when your benefit entitlement is worked out.

From:

https://www.gov.uk/government/publications/pension-freedoms-and-dwp-benefits/pension-freedoms-and-dwp-benefits

The DWP can and do go back any amount of years if they suspect someone has deliberately deprived themselves of their assets.

The DWP will take your pension pot into consideration at the age you can start taking it, whether you do or not.