UC Pension Conts

ewaste

Hello,

Thought I would post this on here to see if anyone can help.

Universal Credit payment calculations don't seem to take into account any pension contributions being made, in fact take home pay shows no deductions even for NI. However the primary area of interest is with regards to pension contributions and the following was posted on the online journal.

"Pension contributions

Pension contributions are not used in the calculation of earnings. The earnings figure used in the calculation of Universal Credit entitlement will be gross earnings: gross taxable pay, minus tax and National Insurance contributions, and ignoring 100% of contributions made to an occupational or personal pension.

When calculating earned income in Universal Credit the Universal Credit calculation disregards any money already invested or that a claimant will invest in a personal or occupational pension.

Savings or property that the claimants states are for their retirement also do not reduce earnings. This remains until a person reaches the qualifying age for State Pension Credit. This enables everyone of working age to invest in a pension to support themselves in retirement.

Only contributions to a pension scheme that are “relievable pension contributions” (section 188 of the Finance Act 2004) can reduce the level of earnings."

This is apparently the internal DWP guidance on the matter which to my knowledge would be contradictory to what is elsewhere both on their own website and the internet in general.

I don't suppose anyone would know what pension scheme would meet the caveat of:-

"Only contributions to a pension scheme that are “relievable pension contributions” (section 188 of the Finance Act 2004) can reduce the level of earnings."

Currently pension contributions are made to the peoples pension and a HL SIPP.

Thanks for your time...

Icequeen99

That's a very poor answer on something that will be a relatively common.

Their ADM guidance might help: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/661667/admh3.pdf

See H3170 onwards which explains what it is. Essentially a contribution paid to a registered pension scheme by or on behalf of the member of that scheme.

IQ

ewaste

Thank you for your reply.

My reading of the rules is that pension contributions into a SIPP by an individual should qualify for reducing 'take home pay' as a SIPP is a valid form of UK Pension scheme and Hargreaves Lansdown a Registered UK Provider.

The only possible issue I can see is starting employment later in the year so that income for that tax year will not breach the personal allowance. Although as I understand it pension contributions below the personal allowance still attract tax relief up to 100% of eligible income for that tax year, essentially a pension subsidy. Therefore the contributions are therefore relievable no?

Either I'm missing something or their guidance on this matter is misleading so as to dissuade people from looking further into it.