Three years ago I was diagnosed with fibromyalgia after a bad accident. I have carried on working through it all until December 31 2016, when I had no choice but to finish work due to my condition.
I am in the throes of trying to claim my work pensions early so my wife and I can live. We have no other income and below £10,000 savings.
My pension will be below £11,500 per annum, for both of us to live on. May I ask, can I apply for a council tax reduction and if I do will I be entitled to a reduction?
Health problems: How to sort out your pension and claim benefits when you’re too ill to work (Stock image)
I have now been signed off by the doctor as unfit for work, and looked at applying for universal credit, my wife does not work and has not for the last 28 years.
We have been told I will not be able to claim anything unless she registers for work and job seeks. However, she actually looks after me.
We have never claimed anything from the state and all of this is an absolute minefield. Please let me know your thoughts.
HOW THIS IS MONEY CAN HELP
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Steve Webb replies: You raise a number of issues about your works pension, access to help with the council tax and access to other benefits, and all of these are inter-connected.
I will try to explain how the system works in general, but I would encourage you to visit your local Citizen’s Advice Bureau for a more detailed and personal response.
Beware pension liberation scammers claiming you can tap your pot early
Victims of ‘pension liberation’ scams can suffer the heartbreaking plight of losing their savings then being landed with a 55 per cent tax bill on the missing money.
Steve Webb has written a previous column about fraudsters who dupe people into believing they can access retirement funds before they are 55. Read his warning here.
Starting with your works pension, I am assuming that you are referring to something called ‘ill health early retirement’ and not to some of the offers that you see on the internet where people say they can help you access your pension ‘early’.
Many of these are scams and you should steer well clear.
Many traditional company pension schemes have special rules for people who need to access their pension early because of ill health. The exact rules will vary from scheme to scheme and the terms you get may be different now that you are no longer with the employer who runs the pension scheme.
There would be no harm finding out from your scheme what pension you could get and when, and what level of medical evidence they would require.
Having said that, I would advise you to think very carefully before starting to draw your company pension.
The reason for this is that any income you get from your pension may be deducted in part, or in full, from any benefit entitlement.
Steve Webb: Find out how to ask the former Pensions Minister a question about your retirement savings in the box below
The rules are different for different benefits, but you could find that once you have taken account of the impact on your rights to benefit, you are little or no better off by taking your company pension.
And if you have had to sacrifice some of the value of your company pension – for example, getting a reduced rate because you are taking it early – then you might be better off not to take the pension until the due date.
Regarding help with the council tax, each local authority will have its own ‘council tax reduction’ scheme. This was once a uniform national scheme, but these days each local authority has slightly different rules.
Most people over state pension age and on a low income would generally get their council tax paid in full, but as you are under pension age you will almost certainly be left with some of the council tax to pay.
As noted above, if you boost your income by claiming your company pension, this income will be included by the council when they look at whether you can afford to pay the council tax and as a result they will give you a lot less help (if any at all) than someone who did not have a company pension.
STEVE WEBB ANSWERS YOUR PENSION QUESTIONS
The Citizen’s Advice Bureau should be able to explain this to you in more detail and with reference to the particular local authority in which you live.
The good news is that help with council tax depends purely on your income and not on whether you or your wife is working or looking for a job.
You mentioned the expectation that your wife should be looking for work before you can claim Universal Credit.
The reason for this is that Universal Credit is paid to households whose total income is below a certain level, and all members of the household are expected to do what they can to provide for themselves by looking for a job if they are fit enough to do so.
If your wife is a full-time carer then she could apply for carers allowance https://www.gov.uk/carers-allowance which would give her extra income and would remove the requirement on her to look for a job.
However, the rules for carers allowance are tough and one of the requirements is that the person being cared for has to be getting a disability benefit such as Personal Independence Payment (PIP).
If your fibromyalgia is having a serious impact on you and you need a carer to help with daily living (eg cooking a meal, getting dressed etc) then you could claim PIP and she could claim carers allowance and then you could perhaps both claim Universal Credit.
On the other hand, if you have much lower level care needs than this then I’m afraid that if your wife is able-bodied and fit to do paid work, then the Department for Work and Pensions would expect her to look for work to help support the two of you as a condition of paying Universal Credit.
ASK STEVE WEBB A PENSION QUESTION
Former Pensions Minister Steve Webb is This Is Money’s Agony Uncle.
He is ready to answer your questions, whether you are still saving, in the process of stopping work, or juggling your finances in retirement.
Since leaving the Department of Work and Pensions after the May 2015 election, Steve has joined pension firm Royal London as director of policy.
If you would like to ask Steve a question about pensions, please email him at [email protected]
Steve will do his best to reply to your message in a forthcoming column, but he won’t be able to answer everyone or correspond privately with readers. Nothing in his replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.
Please include a daytime contact number with your message – this will be kept confidential and not used for marketing purposes.
If Steve is unable to answer your question, you can also contact The Pensions Advisory Service, a Government-backed organisation which gives free help to the public. TPAS can be found here and its number is 0300 123 1047.
Steve receives many questions about state pension forecasts and COPE – the Contracted Out Pension Equivalent. If you are writing to Steve on this topic, he responds to a typical reader question here.It includes links to Steve’s several earlier columns about state pension forecasts and contracting out, which might be helpful.