ESA and SIPPs

Hi there,

I have a client who was wondering if her putting money into a Self invested personal pension (SIPP) would affect her Income related ESA. She vaguely remembers finding a resource that says she can put no more than a certain amount in per year but I am struggling to find anything. She is concerned that they will say she is depriving herself of capital.

Any help/advice is greatly appreciated thank you.

If she is already receiving income-related ESA, then her total capital must already be less than £16,000?

As such, the only question I can see re: deprivation would be if she has between £6,000 and £15,999 and is having tariff income applied to her ESA award.

If so, and she does put the money in a SIPP, then it would be entirely possible for DWP to treat her as having deprived herself of that capital and as she’s already asking about the effect on her ESA award, that’s evidence this has been done with one eye on benefit entitlement being enhanced or protected.

However, I’d also ask the question that if she does have this kind of capital, is it really wise to put it into a SIPP anyway but as we’re not financial advisers, we are unable to advise on whether that is a good idea or not.?

If she had a SIPP, it’s specifically disregarded as pension savings, which are encouraged by DWP, so I’d be surprised if deprivation rules were applied.

Gareth Morgan - 18 September 2023 04:02 PM

If she had a SIPP, it’s specifically disregarded as pension savings, which are encouraged by DWP, so I’d be surprised if deprivation rules were applied.

But there is case law that says taking one form of capital i.e. money in the bank that is taken into account for income-related benefits and turning it into another form of disregarded capital i.e. a pension pot, doesn’t mean you’re exempt from a deprivation decision.

The question to ask DWP is whether the savings would be taken into account, for notional income, after pension age is reached.  Do they want it both ways?