Universal credit and private pension contributions

michaels

justwhat said:

Grumpy_chap said:

RobinHill said:

UC entitlement thresholds are fairly low. I can't imagine there's going to be many if any pulling that off. In addition I seem to recall that the UC directives specifically referred to pension contributions. Anything else they could take the view of deprivation. 

I agree that the number of actual scenarios where SS is used to bring a high earner down to UC levels will be low.  I think I even acknowledged that in my post a little upthread.

I am not certain that SS for a car is deprivation under the rules (though I understand the logic of your comment that it would be deprivation of income).

The topic of SS for a car was discussed in the thread below, but I cannot see that it was able to reach a definite conclusion backed up my clear rules.  (I only skim-read it so may have missed something - the most precise comment seems to be from @yamor )
https://forums.moneysavingexpert.com/discussion/6500882/salary-sacrifice-and-universal-credit/p1

I would think it is mostly people that are on managed migration that are able to bring there earnings down to UC levels.

You need money to live on and people will not want there  living standards to change too much. There may be a few on the benefits that are not means test that are able to contribute large sums to a pension.

There will be a small minority that are doing other obscure things that we would frown upon or would think not possible.

There will defo be people with 16k savings that they diminish and live on while depositing there pay into a pension thus eventually getting full or higher UC.

A 'current account' mortgage would give a suitable savings pot to live off without triggering the 16k savings cut off for UC - it could then be repaid form the pension TFLS.

However I think any discussion of the law makers intentions is bogus - how can we possibly know?

NedS

michaels said:

However I think any discussion of the law makers intentions is bogus - how can we possibly know?

UC Regulations were drawn up to be as close as possible a direct replacement for the benefits they replaced (e.g, Tax Credits, JSA, ESA, IS, housing benefit etc). The intent was not to make any one group of claimants deliberately worse off. Where there was disparity between the regulations of two or more benefits, for example tax credits allowing a 100% deduction of pension contributions whilst JSA only allowing 50%, they had to make a conscious decision which way to go. Clearly in this case they decided to keep the 100% deduction allowed for Tax Credits. Likewise, the UC earnings allowance and taper was close to that on Tax Credits rather than the flat £5, £10 or £20 amounts on JSA.

They were conscious policy decision taken at the time (2013), largely to try to ensure Tax Credit claimants would not be disproportionately affected by migration to UC (the goal was to merge 6 benefits into one, not to make any one group worse off). I understand there were some concerns raised at the time but I do not think they envisaged the extent to which they would be used/exploited, largely from Tax Credit claimants eventually migrating onto UC. This has become most evident in the last couple years since Covid and managed migration brought large numbers of Tax Credit claimants onto UC. But lets not forget, the same 'loophole' existed for 22 years on Tax Credits (and 12 years on UC) so this isn't anything new.

michaels

NedS said:

michaels said:

However I think any discussion of the law makers intentions is bogus - how can we possibly know?

UC Regulations were drawn up to be as close as possible a direct replacement for the benefits they replaced (e.g, Tax Credits, JSA, ESA, IS, housing benefit etc). The intent was not to make any one group of claimants deliberately worse off. Where there was disparity between the regulations of two or more benefits, for example tax credits allowing a 100% deduction of pension contributions whilst JSA only allowing 50%, they had to make a conscious decision which way to go. Clearly in this case they decided to keep the 100% deduction allowed for Tax Credits. Likewise, the UC earnings allowance and taper was close to that on Tax Credits rather than the flat £5, £10 or £20 amounts on JSA.

They were conscious policy decision taken at the time (2013), largely to try to ensure Tax Credit claimants would not be disproportionately affected by migration to UC (the goal was to merge 6 benefits into one, not to make any one group worse off). I understand there were some concerns raised at the time but I do not think they envisaged the extent to which they would be used/exploited, largely from Tax Credit claimants eventually migrating onto UC. This has become most evident in the last couple years since Covid and managed migration brought large numbers of Tax Credit claimants onto UC. But lets not forget, the same 'loophole' existed for 22 years on Tax Credits (and 12 years on UC) so this isn't anything new.

The pension 'loophole' was wider under TC as there was no savings limit on eligibility so it was easier to live of savings whilst diverting income to pension.  I still argue that encouraging pension savings was a deliberate policy rather than a loophole though.

spaniel101

https://assets.publishing.service.gov.uk/media/5a7ba2f940f0b645ba3c5987/enabling_and_encouraging_saving.pdf

https://www.resolutionfoundation.org/app/uploads/2014/08/Getting_On_-_Universal_Credit_and_older_workers.pdf

justwhat

There are still ways to max out on UC/Pension without savings.

Just one example is the use of a relative or wealth from a future inheritance from a living relative.

Many pensioners give there excess monthly wealth to relatives. It can be beneficial to both parties to drip feed income to someone else.(it not just a UC migration issue)

NedS

michaels said:

NedS said:

michaels said:

However I think any discussion of the law makers intentions is bogus - how can we possibly know?

UC Regulations were drawn up to be as close as possible a direct replacement for the benefits they replaced (e.g, Tax Credits, JSA, ESA, IS, housing benefit etc). The intent was not to make any one group of claimants deliberately worse off. Where there was disparity between the regulations of two or more benefits, for example tax credits allowing a 100% deduction of pension contributions whilst JSA only allowing 50%, they had to make a conscious decision which way to go. Clearly in this case they decided to keep the 100% deduction allowed for Tax Credits. Likewise, the UC earnings allowance and taper was close to that on Tax Credits rather than the flat £5, £10 or £20 amounts on JSA.

They were conscious policy decision taken at the time (2013), largely to try to ensure Tax Credit claimants would not be disproportionately affected by migration to UC (the goal was to merge 6 benefits into one, not to make any one group worse off). I understand there were some concerns raised at the time but I do not think they envisaged the extent to which they would be used/exploited, largely from Tax Credit claimants eventually migrating onto UC. This has become most evident in the last couple years since Covid and managed migration brought large numbers of Tax Credit claimants onto UC. But lets not forget, the same 'loophole' existed for 22 years on Tax Credits (and 12 years on UC) so this isn't anything new.

The pension 'loophole' was wider under TC as there was no savings limit on eligibility so it was easier to live of savings whilst diverting income to pension.  I still argue that encouraging pension savings was a deliberate policy rather than a loophole though.

Indeed, a previous DWP objective stated:

Ensure financial security for current and future pensioners by:
helping people to increase their pension savings;
providing information on their private and state pension provision to enable effective planning for the future;
and supporting older people to extend their working lives

but I can assure you that department objective was not foremost in the minds of UC policy makers when the UC Regs were drawn up in 2013 - the overriding objective was to retain parity with Tax Credits, which UC replaced, not to encourage pension saving for retirement.

The UC regs are largely a carryover from the Tax Credits rules, which were HMRC rules based on taxable income.

michaels

So for the first 10 months I eventually managed to get the upload pension contribution link and then get an MR.  Last two months I eventually got a reply saying no need to upload pension info as it won't make a difference (eg back to square 1) and since then despite about a dozen messages from me, no response from UC journal.

And now this month, despite me informing them that my savings remain above the 16k threshold and that after 12 months transitional protection should no longer apply, they have still paid me UC....

Brewery....pissup....

huckster

It is not 12 months transitional protections. It is 12 UC monthly payments where you were paid £1 or more. So if you had any months where UC was zero  then this is why the claim is still running. A to do will appear asking you to report money savings and investments to stop a 13th payment being issued.

justwhat

We are on month 11 of transitional protection. Not had the same problems as some. Our payments are adjusted/sorted before the next calculation date.   We have had the same adviser sorting the claim each month. The advisor has been very polite and efficient. 

michaels

huckster said:

It is not 12 months transitional protections. It is 12 UC monthly payments where you were paid £1 or more. So if you had any months where UC was zero  then this is why the claim is still running. A to do will appear asking you to report money savings and investments to stop a 13th payment being issued.

May was our 12th payment. They have just made a 13th for June and also asked re savings. I can't be bothered to journal umpteen accounts again so I have just journaled then staying still over the limit, but they don't seem to read the journal as have not responded to it for over a month now.