The greater freedom around accessing pensions introduced in 2015 have been hugely popular. In the last two years alone, more than a million people aged 55 or above have accessed a pension pot in a wide variety of ways, commonly taking the full amount in cash or going into a flexible drawdown arrangement. But there has so far been very little focus on how these pension withdrawals may interact with the means-tested benefits system.

The amount of support provided by benefits such as Universal Credit or Pension Credit is reduced  where claimants have capital or have regular income coming in. In some cases, for example, where capital exceeds a certain threshold, a claimant can be entirely disqualified from benefit. It follows from this that those who are on benefits need to think carefully before accessing their pensions and need to appreciate how the way in which they take their pension.

However there is remarkably little help or support for people in making these choices. At this report shows, the benefits system is highly complex and his paper argues that this situation has to change. With growing numbers of people taking advantage of pension freedoms, the interactions with means-tested benefits will become steadily more apparent. Members may even challenge providers or schemes who allowed them to take their pension in a way that proved financially detrimental without offering any warning or support. The paper argues it is time  for the industry, regulators and government to be proactive in tackling this issue before it becomes a new pensions scandal.

Key discussion points include:

• Background to how the system works and the impact of pension freedoms
• How pensions are treated in the means-tested benefit system
• The need for the industry, regulators and government to agree a position on the right
  approach to private pensions and means-tested benefits.
• Short-term solutions to give those providing guidance better tools to help them discuss issues  with retirees.