Is this feasible?

So do you mean they will have been paying into the private scheme all these years, but then choose not to use the pension, in order to claim benefits?

Why pay into the scheme then?

My my living off the state when there’s a private pension sitting around, get a life and enjoy it while you can otherwise that private pension will go to you’re next of kin when you pop your clogs which can happen at any time, share it with those less fortunate don’t be greedy or one of the needy.

Yes - if they want to leave the private pension to continue to get interest. It would be foolish not to take the 25% tax free lump sum and equally foolish not to investigate what would happen to it on death.

I know someone who worked for only 2 companies in their working life. He can more than manage on his DWP and one pension, so the other has been left to grow. All with the approval and advice of an IFA.

In my own case - one of DH’s pensions is from a final salary scheme and I receive 100% of that and it will pass to the DDs on my death - if there’s anything left.

*However, to leave a private pension to get benefits is just immoral and in my opinion should be illegal too!!

Bonnybanko

My my living off the state when there’s a private pension sitting around, get a life and enjoy it while you can otherwise that private pension will go to you’re next of kin when you pop your clogs which can happen at any time, share it with those less fortunate don’t be greedy or one of the needy.

"A pension from a defined benefit pot can usually only be paid to a dependant of the person who died, for example a husband, wife, civil partner or child under 23. It can sometimes be paid to someone else if the pension scheme’s rules allow it - but it will be taxed at up to 55% as an unauthorised payment."

Not so, Bonnybanko, the pension pot doesn't automatically go to the next of kin.

And yes, I do feel that paying into a scheme for decades and not drawing on it personally is simply bonkers.

I also feel that it is morally wrong to claim benefit when there is a private pension pot waiting to be sourced.

My question was "Is it feasible?' Does anyone know someone who has actively done this? Surely, legislation is in place to ensure retirees use private pensions when they leave work?

No it’s not fair and one reason why some of us ‘ just overs’ can’t get any help while others get loads

Georgesgran

***However, to leave a private pension to get benefits is just immoral and in my opinion should be illegal too!!

Completely agree with you Georgesgran.

PIP is not means-tested. Final salary pensions often pay out higher rates if you delay taking them. If they have a substantial private pension then they probably have substantial savings to live off until they choose to take their private pension.

Having a private pension does not mean you don’t claim state pension. Getting state pension AND pension credit suggests they will be ineligible for the winter fuel payment. I respectfully suggest that your scenario is unlikely - in relation to the pension credit and the WFA.

“ Surely, legislation is in place to ensure retirees use private pensions when they leave work?”

No, of course not. Why would it be?

Probably, if you are the sort of person who likes to lie and cheat.

Of which there are many.

“ In my own case - one of DH’s pensions is from a final salary scheme and I receive 100% of that and it will pass to the DDs on my death - if there’s anything left.”

This is not quite right - there can’t be anything “left” in a final salary pension. It’s not a pot but a continuous payment based on a percentage of the worker’s final salary. It certainly won’t pass to grandchildren. If it’s a pension fund “pot” then of course that’s feasible.

No it isn't.

This is because when assessing your entitlement for Pension Credit you must reveal ALL your investments and savings and ALL your sources of income, whether you draw that income or not. Any capital over £10,000 and you are assessed as getting a nominal income of £2 a week from it and that is added on to your income. An entitlement to a pension, even though you choose not to draw it will be included.

The capital value of a SIPP will be included, unless you buy an annuity, in which case the income from the annuity will be added to your income.

If your income is then too high to receive Pension Credit, you will not get the WFA.

PIP is not a means tested benefit and anyone who quaalifies for a PIP or AA will get the payment regardless of income.

I don’t know how it worked, but someone I know who left well over £1m cash and 2 houses paid off when he died, had managed a few years previously (after IIRC a financial assessment) to get 50% of a few modifications to his house, paid for by the council.

As far as I can tell, he’d kept a lot of that cash well away from prying eyes, inc. those of his wife. We who had known him very well for a long time, had thought he was comfortable, if very tight! - but had no idea that he had anything like as much.

The simple answer is no.

www.gov.uk/pension-credit/eligibility

If you’ve deferred your pension

If you’re entitled to a personal or workplace pension and you have not claimed it yet, the amount you’d expect to get still counts as income.

I’m not certain but I think a private pension has to be taken at 75yrs old and changed to an annuity or other investment, it can’t keep accumulating as a pension.

When it comes to claiming benefits it is possible to not declare an investment or bank account, historic accounts might not get revealed in any checks. In the same way a cache of diamonds or gold sovereigns could be hidden, those who do that are not concerned about morality.

I've never heard of anyone doing this.

As for leaving it to let it grow, that could prove to be poor advice as growth could stagnate.

A bird in the hand is worth two in the bush, as the saying goes.

I don’t believe this is feasible or possible, unless the person doing this has lied and is then committing fraud.

Whether this is possible would depend on the nature of the private pension. However, not declaring an asset when claiming pension credit is fraud, as Cossy says. If this were someone I knew I would feel morally obliged to report them. It can be done anonymously.

If you asked because you know someone doing this, OP, please report them. It is fraud, and morally wrong to claim from public funds at the taxpayers’ expense when they have their own means.

No.

Though I believe one can allow their private pension to accumulate and then leave it on to others after one passes.

It is perfectly possible not to claim your private pension.
Not sure it would always grow. Probably depends what type of pension it is, and when it was taken out.

I dont know about the rest of your questions.

Cabbie21

If you asked because you know someone doing this, OP, please report them. It is fraud, and morally wrong to claim from public funds at the taxpayers’ expense when they have their own means.

Indeed, because if someone is doing this then they have withheld information and made a false declaration to the DWP. When caught, they would not only lose the benefits but could face prosecution and sanctions for three years.

If in the meantime their pension fund went bust - as sometimes happens through corporate mismanagement and fraud - or a reckless government action causes funds to fail as the Truss/Kwarteng budget almost did and Reform’s “Contract” (now abandoned) would have done - where would they be? Sanctioned and unable to claim any help.

The ruse wouldn’t work anyway, as M0nica and I have already explained above but why would anyone with a substantial private pension want to defer it to receive what would probably be a lesser amount in benefits?

It's been said that Pension Credit could be worth £3,800 p.a. or £75 p.w. although how that sum has been arrived at has been questioned by some. In 2024, the DWP itself said unclaimed PC was an average of £2,100 p.a. per household based on 2022 numbers. On top of Pension Credit, a claimant would receive WFP £200, WHD £150 and help with eye and dental care. Say the whole package was worth a maximum of £5,000 a year tax free.

For a basic rate taxpayer, that would equate to £6,250 in private pension income. I would not consider that a substantial pension after a lifetime of work.

Deferring a pension is taking a gamble that you are going to live long enough to enjoy it or even claim it. Typically a widow(er) or civil partner would receive 50%.

The main reason a deferred pension is paid at a higher rate (becuse growth cannot be guaranteed) is because with average life expectancy, the person won’t be receiving it for as long. The reverse is true if you take a pension early. It’s paid at a lower rate as you will, with luck, be receiving it for longer.

If all of this is some ruse because someone feel disgruntled at losing the WFP then it’s extremely petty but it’s what I have long said about means-testing and residual welfare. It causes division.

Beware - the laws around fraud are very strict and it's doubtful whether anyone would get away with this one - not least because the bodies which control pensions and other entitlements are not stupid (if you asked anyone in the relevant government department, they'd laugh you out of the room -- "Oh, THAT old chestnut!").

David49

I’m not certain but I think a private pension has to be taken at 75yrs old and changed to an annuity or other investment, it can’t keep accumulating as a pension.

When it comes to claiming benefits it is possible to not declare an investment or bank account, historic accounts might not get revealed in any checks. In the same way a cache of diamonds or gold sovereigns could be hidden, those who do that are not concerned about morality.

All banks, building societies, public companies and othe rfinancial organisations have to make a return to the HMRC each year listing dteails of their depositers, their balances and any interest added.

The only way to hide money from the tax authorities, is cash under a mattrass or valuable goods - jewellry, watches, etc etc.

I had several clients who had to repay Pension Credit, when the next annual check up showed they owned accounts they had forgotten about. One might have been deliberate fraud, but the rest were all small somes of money that people had forgotten they had. The most anyone had to pay back was a couple of £100s.