Pensions - Articles - Portal Financial on means-tested benefits clarification

 Portal Financial, one of the UK’s leading pre- and at-retirement advisers, welcomes clarification on the assessment of pension payments for means-tested benefits, removing the current ambiguity and protecting thousands of people.

  

 The Autumn Statement confirmed that means-testing will not be based on the total size of a pension fund, despite the pension freedoms allowing a person to have unrestricted access to their defined contribution pension. Instead, notional income for funds that have not been accessed, or have been accessed flexibly, will be based on 100% of an equivalent annuity. If actual income is higher, that will be considered instead.

  

 Jamie Smith-Thompson, managing director at Portal Financial, said: “We welcome the clarification on means-tested benefits well before April 2015 when the pension changes take effect, as until now the position was ambiguous and could have been interpreted as the whole of a person's pension pot needing to be spent before being considered for means testing, which may have made thousands of low earners ineligible for benefits. The government has confirmed that it will continue to use notional income based on an equivalent annuity for means-testing, and having full access to a pension will not affect a person's eligibility to benefits."