Lump sum from pension & benefits

[mpe1967]

Morning,

Does anyone know - if you take a lump sum from your pension at 55 is the money classed as income or savings for means tested benefits. Plenty of information about tax and lump sum at retirement but can't find the answer for this.

Thanks 😀

I think it's income for the financial year in which it's received, then after that savings.

😢 blast was hoping to use some of it to achieve a life long yearning for a cruise before my mobility gets that bad I can't get out.

it won't affect non means tested disability benefits anyway. You can have as many savings or as much income as you like.

What benefits exactly are you referring to?

Well it wouldnt affect things like DLA or Pip but woukd affect means tested benefits like housing benefit or income related esa.

It's not taxable.

MyBrilliantDisguise it could be taxable. You can take up to 25% of your pension savings as a lump sum tax-free, but if you take more than that under the ‘freedom and choice’ rules it’s taxable.

it could be taxable. You can take up to 25% of your pension savings as a lump sum tax-free, but if you take more than that under the ‘freedom and choice’ rules it’s taxable.

^this

The remaining 75% of your pension could be taxable depending on what your taxable income is. If you stay under your personal allowance for the year you may not end up paying any tax when withdrawing remaining 75%.

Are you taking about housing benefit? Taking a lump sum out of your pension isn't used as income just capital amount. Not sure about esa or jsa.

I'm a housing benefit assessor btw

Sorry all been unwell. Thank you for your advice.

It would be counted as savings AFAIK. So would affect any means tested benefits but not benefits which aren't means tested. I don't think it would be counted as income.