Universal Credit & Pension

changeoflife

Hi,

I'm after some financial advise regarding an endowment policy I have that is due to mature soon. I'm a single parent now, 2 young kids, but have had the endowment going for almost 25years. I've paid into it (not attached to a mortgage anymore) as a way of ensuring I saved something for my eventual pension.

Since splitting up with my h I've continued to pay the endowment with the intention that when it matured I would invest it into a pension plan as I'm no longer going to get any of my exh pension and have no other pensions myself.

However since being a single parent I've been claiming ctc and wtc. I work but in a low paid job, 29hours a week.

I appreciate that when the endowment matures this will class as income and I won't be eligible for tax credits for the next tax year. However I'm confused now as to whether or not I should put the endowment into a pension plan at all. Would this count as deprivation of assets and so I wouldn't be able to put in a new claim which would then be Universal Credit.

Should I live off the lump sum then have no pension when I retire? I've saved this money thinking it would provide a small pension but am scared to put it into a pension pot if I'm doing something wrong!!

Can anyone help? If I put it into the pension will it make me unable to claim Universal Credit and not able to access the capital to live on too?

sammyjammy

It will be classed as Capital not income and will therefore not affect your tax credits.

If you put it into a pension as soon as you receive it then you should be ok, you will not be moved to Universal Credit for some time (in the unknown future).

changeoflife

Thank you.


So an endowment policy maturing is not considered 'income'?

rogerblack

changeoflife wrote: »

Thank you.


So an endowment policy maturing is not considered 'income'?

For UC, any capital that you could access - even if you say it's for a pension that is not actually invested now in a pension will count as capital, and if you have >16K will totally eliminate your UC.
Income from any sort of investment will reduce your UC, as I understant it in exactly the same way as earned income.

xylophone

You can contribute to a pension but if you are claiming means tested benefits may be expected to access it at a certain age.

http://www.hl.co.uk/pensions/sipp/how-much-can-i-invest

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/417473/pension-flexibilities-dwp-benefits.pdf

xylophone

When will your employer provide a pension?

https://www.gov.uk/workplace-pensions