Paying for care using pension savings or drawdown

The money you take from or leave in your pension can affect how much you may have to pay towards care costs.

How your pension pot is taken into account

Taking cash from your pension

If you take cash in chunks or your whole pot in one go and put it into savings or invest it, your local council will treat it as an asset and include it when they work out what you can afford to pay.

Leaving your pot untouched

If you leave money in a pension pot your local council won’t count this when they calculate how much you can afford to pay for care. When you reach Pension Credit qualifying age your local council will assume you’re receiving an income from your pension.
If you don’t take an income, they’ll check how much you’d receive if you bought an annuity and use this amount when they work out your income.

Drawdown income

If you take an income through drawdown, they’ll look at how much you’d get if you bought an annuity, and how much adjustable income you’re taking. The higher amount will be used to assess your income.

If you deliberately spend or give away money (including tax-free cash) from your pension pot to get or increase help with care costs, your local council may assess your finances again and treat you as still having that money.