I will be 60 in a few months, and I'm currently a carer living just on Carer's Allowance and Universal Credit, which I've been receiving for a few years now while caring for a family member.

I have a few pension funds and according to a letter I've received from an NHS one I would be eligible to claim from the age of 60.

Will I have this deducted from my benefits if I do this however?

The other pensions I have are also from the NHS, and one is from a local authority, for which the normal pension ages are 65 and 66.

Am I best just leaving them all until I draw my state pension, which I believe I do at 66, and drawing them altogether at the same time? Feeling confused...

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Steve Webb replies: There is one set of benefit rules for people under state pension age and another for those over pension age.

People over state pension age are, broadly speaking, expected to access any pensions they have built up or will be treated as having done so.

But for people, such as yourself, who are under pension age, the rules are more complex.

If we start with the simple case of modern ‘pot of money’ pensions, which are most common in the private sector these days, the basic principle is that money sitting in such pensions is ignored when your benefit is worked out when claiming working age benefits.

In its official guidance (Pension freedoms and DWP benefits) the DWP says:

'If you (or your partner) are under the qualifying age for pension credit, and you do not take any money from your pension pot, then it will not be taken into account when your benefit entitlement is worked out.'

However, if you freely choose to take money out of this kind of pension then it would count when you are assessed for Universal Credit.

The way it would be treated depends on whether you take a regular amount or just the occasional lump sum.

The DWP says:

'If you or your partner do take money from your pension pot, it will be treated as either income or capital, depending on, for example, how regularly you withdraw it.'

With regard to the pensions you have built up whilst working in the public sector (salary related or ‘defined benefit’ pensions), if you take such a pension it will count in full as ‘unearned income’ for Universal Credit purposes.

This means every pound of occupational pension you receive will mean one pound less of Universal Credit.

For those who are instead on contributory Employment Support Allowance (ESA) a more generous rule would apply.

The first £85 per week of any occupational pension is ignored and only 50 per cent of any pension above this level is taken into account.

Normally, one advantage of delaying ('deferring') taking your pension if you are not on benefit is that it might entitle you to a higher amount when you do finally receive it.

For example, the Local Government Pension Scheme website says:

'If you take your pension after your Normal Pension Age, it will be increased. The increase is based on the number of days from your Normal Pension Age to the date you take your pension.'

The exact rules on how deferred pensions are worked out can vary from scheme to scheme and even from ‘section’ to ‘section’ within a single scheme, so it is important to check the rules before making any decisions.

However, DWP have rules about ‘notional income’ from pensions and other sources.

This allows them to treat you as receiving an income even if it is not actually being drawn.

I have looked at the detailed regulations which cover Universal Credit and at Section 74(1), which is entitled 'Notional Unearned Income' it says:

'If unearned income would be available to a person upon the making of an application for it, the person is to be treated as having that unearned income.'

In the case of an occupational pension where you have reached the normal pension age, it seems that you would be treated as if you were already drawing it and your UC reduced in any case.

In short, the rules about when you can be expected to take different types of pension seem to be loosely based around the age at which you might reasonably be expected to draw them.

In the case of ‘pot of money’ pensions, the government has decided that you could only be expected to have drawn on your pension pot once you reached pension age.

But for occupational pensions which may have a lower ‘normal pension age’, it is the age at which you become entitled to it (at the normal rate) which appears to be the key.

Regarding your Carer’s Allowance, you can be paid this in addition to an occupational or personal pension, as the income from these is not counted as earnings. Gov.uk says:

'Payments that do not count as earnings include: • money received from an occupational or private pension.'

Carer’s Allowance will usually stop at state pension age.

Finally, I’m afraid that, based on your date of birth, your state pension age will be 67 rather than the 66 you are assuming.

My recent column sets out the timetable for the move from 66 to 67 in more detail: I'm 66 in April 2026 so how long will I have to wait for my state pension?