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Pensions reform

Dolly Dimple

Registered User
Aug 30, 2014
6
This is probably irrelevant but I was on the forum and thought I would ask as its niggling at the back of my mind. With the new rules, could Social Services demand that a pension pot be cashed in to fund care?
I admit that I don't know what happened before the changes but sort of assumed that the monthly pension received was put in the income pot.
Just curious
Dolly
 

Pickles53

Registered User
Feb 25, 2014
2,474
Radcliffe on Trent
This is probably irrelevant but I was on the forum and thought I would ask as its niggling at the back of my mind. With the new rules, could Social Services demand that a pension pot be cashed in to fund care?
I admit that I don't know what happened before the changes but sort of assumed that the monthly pension received was put in the income pot.
Just curious
Dolly
Not irrelevant at all, we are trying to find this out at the moment as the majority of my husband's pensions savings are in a 'pot' which we do not intend to convert to annuity. My suspicion is that since these funds can now be accessed just like any other savings that they will be treated as an asset for care funding purposes. Still looking, will post if I find a definitive answer.
 

susy

Registered User
Jul 29, 2013
801
North East
I think that this is exactly right. If it is not put in to an annuity then it will be deemed as savings and treated as such.
 

Kevinl

Registered User
Aug 24, 2013
4,771
Salford
I think that this is exactly right. If it is not put in to an annuity then it will be deemed as savings and treated as such.
But as part of the new rules allow you to cash in an annuity there where previously the money in an annuity was beyond anyone's reach it is now accessible.
How will this will work if you have a joint life annuity where a woman might well be expected to benefit for longer than a man due to men's shorter life expectancy, if cashed in (at a reduced value) then the money halved this could be quite costly for the longer lived of the partners, as I say usually the woman.
As for Dolly's question I can't see why they can't cash in a pension pot, it is an asset so cashing it in to pay for care would seem reasonable to Social Services to get in a much cash as possible.
It remains to be seen but I can see these changes hitting women in particular, as a pension dies with you then what's the incentive for men with a shorter life expectancy and anyone with impaired health to stay in something that pays out long term, if they all start taking money out where will the money come from to pay the longer lived who stay in?
K
 

jan.s

Registered User
Sep 20, 2011
7,352
68
It is my belief that a "pension pot" would be used to fund care; it is an asset,

An alternative would be to buy an annuity to fund the care. I see no advantage to doing that though.

I have just found this quote from the Telegraph:

People who cash in their pensions under the government reforms may end up paying more for their care, David Cameron has admitted.
From 2016, people with assets of more than £118,000, including their own homes, will have to pay for their social care in old age.
The Prime Minister said that those who choose to take large sums from their pension pots under the Government’s reforms could be pushed over the limit.
However, he said that people “have a choice” about whether they take out an annuity or decide to withdraw their money and invest it elsewhere.
“The point about care homes is important. I know there is a concern that if you take your money out of your pension pot and have it as your own money, it counts as your money when you are assessed for care needs. That is true, that is the case, but you have the choice,” he said.
 
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Kevinl

Registered User
Aug 24, 2013
4,771
Salford
It is my belief that a "pension pot" would be used to fund care; it is an asset,
An alternative would be to buy an annuity to fund the care. I see no advantage to doing that though.[/COLOR][/I]
I won't say never believe a politician but never...
How would it benefit a council to buy or have someone get an annuity which might pay a pension of (let's say) £6k a year on a pot of £100k (and that's generous) surely they'd rather have the £100k and (allowing for care home costs of £500 a week) hope you don't last 200 weeks.
Mr Cameron seem to be implying if you leave the money in a pension then it won't count as an asset, let's see if that proves to be the case.
K
 

jan.s

Registered User
Sep 20, 2011
7,352
68
Buying an annuity was my comment, not a comment made by a politician. I have spoken to my Financial Advisor and this was something he suggested to me as a possibility, but, as I said, I see no advantage in doing so.

I agree it does sound as if you leave it in the "pot" it is not considered as an asset, but I can't see that happening.
 

Kevinl

Registered User
Aug 24, 2013
4,771
Salford
Buying an annuity was my comment, not a comment made by a politician.
David Cameron has admitted...However, he said that people “have a choice” about whether they take out an annuity or decide to withdraw their money and invest it elsewhere.

The PM did mention buying an annuity in the article, however, as buying an annuity can now be reversed no one really knows how much of a game changer it will be.
If you could be made to sell a dual life annuity to release capital for your partner's share in order to pay for care then repurchase in your name only you could incur a significant financial loss in the transaction and a reduced income as you'd be doing single life for a woman as opposed to dual life with a man.
Time will tell exactly how it all works out but my suspicion is that it's going to hit women in the years to come.
K
 

Pickles53

Registered User
Feb 25, 2014
2,474
Radcliffe on Trent
I agree it does sound as if you leave it in the "pot" it is not considered as an asset, but I can't see that happening.
Me neither! Thanks for finding the quote from David Cameron, strikes me as very carefully worded. He's not actually saying explicitly that money in the 'pot' won't be counted, but he is implying it.
 

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