Universal Credit 16k+ savings transistional protection?

MissMoneypenny

Re transitional protection. From what I have read on UC so far, if seems claimants will lose their transitional protection if they fail to meet their minimum earnings requirements for 3 months. One of the parents earning requirements for Universal Credit will be based on the age of their youngest child, but the other parent will have to earn 35 hours per week at national minimum wage.

zagfles

MissMoneypenny wrote: »

Re transitional protection. From what I have read on UC so far, if seems claimants will lose their transitional protection if they fail to meet their minimum earnings requirements for 3 months. One of the parents earning requirements for Universal Credit will be based on the age of their youngest child, but the other parent will have to earn 35 hours per week at national minimum wage.

That's not what it says in the Dec 2012 briefing note (not sure if there's a later one), it says (as one of the changes that ends TP)

a sustained (3 month) earnings drop beneath the level of work that is expected of them according to their claimant commitment;

So if earnings are already below the work requirement it doesn't sound like that would apply, or not unless earnings drop further anyway.

zagfles

nannytone wrote: »

the obvious answer is to contribute to a private pension instead of 'saving'
this may also increase you entitlement as contributions to a pension are disregarded when working out tax credits

Excellent idea. If you're saving for your retirement use a pension, that won't count as savings and your contributions are deducted from your income so you'll get more tax credits now by saving in a pension.

This applies to UC as well, pension contributions are 100% deductible from income like tax credits (originally it was going to be 50% but they changed their minds as it would probably make the real time system too hard).

Though make sure you understand the limits on contributions and the restrictions on getting the pension money out.

tinkledom

zagfles wrote: »

Excellent idea. If you're saving for your retirement use a pension, that won't count as savings and your contributions are deducted from your income so you'll get more tax credits now by saving in a pension.

This applies to UC as well, pension contributions are 100% deductible from income like tax credits (originally it was going to be 50% but they changed their minds as it would probably make the real time system too hard).

Though make sure you understand the limits on contributions and the restrictions on getting the pension money out.

Yes that is one of the most efficient scams that I have come across. I don't blame people for doing it either especially if it stops the Child Benefit from being clawed back.

cattermole

It's all going to come crashing down, because the work isn't there for people to make up the shortfall.

A gradual change would make more sense.

zagfles

Lancashirehotpot wrote: »

Saving for retirement in a pension is a scam??

Course it isn't, it's specifically allowed as an incentive for people to save for their old age.

zagfles

cattermole wrote: »

It's all going to come crashing down, because the work isn't there for people to make up the shortfall.

A gradual change would make more sense.

What do you mean?? You realise that under UC (unlike WTC) you don't need to work the required amount, you just need to seek work? So if there are no jobs people will still get their UC. Plus there won't be any Bulgarians coming here to take non existant jobs, just like the Poles didn't

BigAunty

zagfles wrote: »

Course it isn't, it's specifically allowed as an incentive for people to save for their old age.

I agree.

The storm around pension contributions being seen as some kind of bad loophole also existed under tax credits.

There was a thread on the pension forum on MSE by someone who worked out that if they put the bulk of their salary into pension contributions, they could merrily live off the tax credits and retire early with a massive pension when his children were too old for him to get further child tax credits.

Wish I bookmarked it now as it was an interesting read, particularly because people were saying 'no, you can't do this, its not allowed' but then couldn't find any proof in the benefit rules that forbade it.

zagfles

BigAunty wrote: »

I agree.

The storm around pension contributions being seen as some kind of bad loophole also existed under tax credits.

There was a thread on the pension forum on MSE by someone who worked out that if they put the bulk of their salary into pension contributions, they could merrily live off the tax credits and retire early with a massive pension when his children were too old for him to get further child tax credits.

Wish I bookmarked it now as it was an interesting read, particularly because people were saying 'no, you can't do this, its not allowed' but then couldn't find any proof in the benefit rules that forbade it.

This one? https://forums.moneysavingexpert.com/discussion/3655837

BigAunty

zagfles wrote: »

This one? https://forums.moneysavingexpert.com/discussion/3655837

Brilliant. I searched for it 3 times and couldn't unearth it.

Yeah, love the guy who took a modest hit in his salary, got tax credits and retained his child benefit but got a massive boost to his pension pot.

http://forums.moneysavingexpert.com/showpost.php?p=61509779&postcount=288