If you choose to withdraw funds from your pension pot and manage it directly, for example combining it with other assets rather than through a pensions product, this may be treated as capital under the rules in Annex B.
What is a SIPP?
A self-invested personal pension (SIPP) is the name given to the type of UK government-approved personal pension scheme which allows individuals to make their own investment decisions from the full range of investments approved by HM Revenue and Customs
Annuity and pension income
While the capital is disregarded, any income from an annuity must be taken fully into account except where it is:
- (a) purchased with a loan secured on the person’s main or only home
- (b) a gallantry award such as the Victoria Cross Annuity or George Cross Annuity
Reforms to defined contribution pensions came into effect from April 2015. The aim of the reforms is to provide people who are over 55 years old with much greater flexibility
The rules for how to assess pension income for the purposes of charging are:
(b) if a person is only drawing a minimal income, or choosing not to draw income, then a local authority can apply notional income. This must be the maximum income that could be drawn under an annuity product. If applying maximum notional income, any actual income should be disregarded to avoid double counting
(c) if a person is drawing down an income that is higher than the maximum available under an annuity product, the actual income that is being drawn down should be taken into account
Occupational Pension income
Where a person is in a care home and has a spouse or civil partner who is not living in the same care home and is paying half of the value of their occupational pension, personal pension or retirement annuity to their spouse or civil partner, the local authority must disregard this payment
Thank you for reading this weeks blog, Local Authority Charging and Pensions.
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Care Navigators
(January 2023)
