Drawing pensions when already in a care home

[FiveWords]

Hi all,

Dad is in a care home and is not self funding anymore, but isn't far off the £14k lower threshold. He has 3 pensions that he has not yet claimed (he isn't retirement age yet, and he never formally retired from work [just got sacked for being "incompetent" ]), and I am trying to work out if there is any point drawing them now? My understanding is that all his income bar the last £22.30 per week will go to his care home fees anyway, so isn't it a little futile? What happens to the pension pot if it goes unclaimed until after he dies? Will it go to his estate or just vanish into the ether?

Alternatively, might it be worth us drawing the pension along with the largest possible lump sum we can get, as capital is at least a little more useful to him than income? Just to clarify, he does pay a top-up on his fees (yes he pays it himself - I don't really understand how this is allowed but I'm not complaining as I don't have £85 per week to spare) which comes out of his savings, so obviously we need to preserve his savings for as long as possible to avoid him having to move to another care home when he can no longer fund the top up. But if he gets a lump sum, will this not effectively just be taken off him again as he will go over the £14K (and maybe even the £25K, depending on the size of the lump sum ) threshold and start contributing more towards his fees again?

Any ideas at all would be appreciated. Is this pension just basically useless to him now?

 

[nitram]

Don't know how the LA will view the undrawn pension.

A few questions:-
Is he financially capable?
Is he a widower?
If not a widower, is the pension a single life or does it have a survivorship clause?

Assuming single life, as regards what happens to the fund if he dies without claiming, ask the fund administrators/trustees.

He may also be able to get an increased impaired life pension but you may have to transfer the fund to another provider to achieve this.

 

[sue38]

Looking at CRAG I think the LA would treat him as in receipt of the pension, even if he's not actually claiming it.

8.065 Subject to certain exceptions, income which the LA is satisfied would be available to the resident if an application were made, but which has not yet been acquired, is to be treated as belonging to that resident.

8.069 Examples of income which may be treated as belonging to the resident are:
1. unclaimed councillor's attendance allowance
2. unclaimed Social Security benefit (but not Severe Disablement Allowance).
3. occupational pension not claimed.

So I think it might as well be claimed as it may at least allow your dad to remain in his present care home for longer. As to whether you take the maximum lump sum, or maximum income, I think it might be as well to take advice from an independent financial adviser. Usually the advice is to take the maximum lump sum, but if that's going to make your dad fully self funded it may not make financial sense.

 

[FiveWords]

Don't know how the LA will view the undrawn pension.

A few questions:-
Is he financially capable?
Is he a widower?
If not a widower, is the pension a single life or does it have a survivorship clause?

Assuming single life, as regards what happens to the fund if he dies without claiming, ask the fund administrators/trustees.

He may also be able to get an increased impaired life pension but you may have to transfer the fund to another provider to achieve this.

Sorry Nitram, I posted that message then beggared off on holiday without checking for replies!

He isn't a widower; he's divorced. The pension is single life.

I'm not sure what you mean by "financially capable." Do you mean can he look after his own financial affairs or does someone have to do it for him? If so, then no, he is not. Not even slightly.

Sue38: It's interesting to hear that he may be treated as having the pension income even if he doesn't claim it. That means I will probably have to claim it, then. (Hurray! More admin for me! ) I will do my sums with the lump sum and see if it will push him into full self-funding if he takes the largest lump sum possible. He has a couple of separate pots so it may be that I can pick and choose the amounts from each provider to ensure they add up to just the right amount to keep him below the threshold .

 

[nitram]

OK, so he takes the pension benefit in some form or it dies with him.

You have to get the best deal that you can subject to CRAG and the LA.

Things to consider.

Self funding has benefits over LA funding, maximum commutation may maintain self funding status and any left over would form part of his estate. If all the funds go at least he had the benefit

You may be able to obtain an impaired life pension which will be higher than standard.

Probably not much point in having any kind of inflation linking.

You need to get some figures from the fund managers, don't forget that you can usually move the fund to A N Other to take the benefits.