Private pension, lump sum and universal credit.

Mutabilisrose

I have recently retired due to ill health at 55. I will receive a lump sum of £75000 and a monthly pension of £950. My partner aged 53 was made redundant recently and we were "living" off his redundancy payment which has now gone. He is currently on job seekers allowance which ends after 6 months. We have approx £80000 left to pay on our repayment mortgage. A secondary mortgage of £540 a month and further outgoing including food of approximately £1000. Can I use my pension pot to pay off the mortgage debt and then claim for universal credit? Hubby will continue to look for work but he keeps being told he is over qualified. 

calcotti

Paying off debt is not treated as deprivation of capital for UC purposes so you should be able to do this.

http://www.legislation.gov.uk/uksi/2013/376/regulation/50
“Notional capital

50.—(1) A person is to be treated as possessing capital of which the person has deprived themselves for the purpose of securing entitlement to universal credit or to an increased amount of universal credit.

(2) A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—

(a) reducing or paying a debt owed by the person; or

(b) purchasing goods or services if the expenditure was reasonable in the circumstances of the person's case.

(3) Where a person is treated as possessing capital in accordance with this regulation, then for each subsequent assessment period (or, in a case where the award has terminated, each subsequent month) the amount of capital the person is treated as possessing (“the notional capital”) reduces—

(a)in a case where the notional capital exceeds £16,000, by the amount which the Secretary of State considers would be the amount of an award of universal credit that would be made to the person (assuming they met the conditions in section 4 and 5 of the Act) if it were not for the notional capital; or

(b)in a case where the notional capital exceeds £6,000 but not £16,000 (including where the notional capital has reduced to an amount equal to or less than £16,000 in accordance with sub-paragraph (a)) by the amount of unearned income that the notional capital is treated as yielding under regulation 72.”

calcotti

If you have health issues you could also look at Personal Independence Payment. 
https://www.citizensadvice.org.uk/benefits/sick-or-disabled-people-and-carers/pip/

You may may also be able to claim new style ESA. Although not means tested, pension income is considered and with a pension of £950/month you would not be entitled to very much. https://www.gov.uk/guidance/new-style-employment-and-support-allowance

Any ESA will reduce your UC entitlement but if in the future if you are no longer entitled to UC the ESA would, if you have been placed in the Support Group, continue.

poppy12345

Your monthly pension will be classed as income and reduce your UC £1 for £1 and it will likely reduce it to zero because you won't be entitled to housing element for rent.

New style ESA maybe possible if you've paid enough NI contributions in the years April 2017 - March 2019. You will need a fit note from your GP to be able to claim this.

Mutabilisrose

Thanks for the replies. I did do the quick check benefits entitlement that is on this site and I put in my £950 pension. I did it assuming I would have paid off the mortgage and had no savings and it came out that we get £470 per week for us both. Is this wrong. Would it be best to speak to someone at the job centre?

calcotti

poppy12345 said:

Your monthly pension will be classed as income and reduce your UC £1 for £1 and it will likely reduce it to zero because you won't be entitled to housing element for rent. 

It will be nil unless there are additional elements.

ESA Support Group would be £44/week after the pension income is taken into account.

OP, unless there are children involved to boost your UC entitlement it looks as if you can only claim new style ESA. However the amount is small.

Depending on your local authority scheme you may qualify for some Council Tax Reduction to help with your Council Tax bill.

EDITED: initial calculation was incorrect.

poppy12345

Mutabilisrose said:

Thanks for the replies. I did do the quick check benefits entitlement that is on this site and I put in my £950 pension. I did it assuming I would have paid off the mortgage and had no savings and it came out that we get £470 per week for us both. Is this wrong. Would it be best to speak to someone at the job centre?

For UC this is not correct. As advised, if you've paid enough NI contributions then it's New style ESA  but your pension will also reduce this because anything over £85 per week pension will reduce your ESA 50p for every £1 over that amount.

calcotti

Mutabilisrose said:

Thanks for the replies. I did do the quick check benefits entitlement that is on this site and I put in my £950 pension. I did it assuming I would have paid off the mortgage and had no savings and it came out that we get £470 per week for us both. Is this wrong. Would it be best to speak to someone at the job centre?

UC is a monthly payment not a weekly payment. Did you put in your £950/month pension? It is taken fully into account as unearned income in calculating UC entitlement.

Apart from you and your husband do you have children that would be included?

if you want a benefits check you will need to go to Citizens Advice or other advice agency available in your area.

Mutabilisrose

From what everyone is saying I should be able to get universal credit payments of approx £1700 - my pension of £950 = £750 and ESA of around £176 per month. So £950 + £750 + £176 = around £1876. I wonder if I could get help with secured Firstplus loan of £540 a month. I did look at SMI but I wasn’t sure if it would be better to just try and pay it. 

Mutabilisrose

calcotti said:

Mutabilisrose said:

Thanks for the replies. I did do the quick check benefits entitlement that is on this site and I put in my £950 pension. I did it assuming I would have paid off the mortgage and had no savings and it came out that we get £470 per week for us both. Is this wrong. Would it be best to speak to someone at the job centre?

UC is a monthly payment not a weekly payment. Did you put in your £950/month pension? It is taken fully into account as unearned income in calculating UC entitlement.

Apart from you and your husband do you have children that would be included?

if you want a benefits check you will need to go to Citizens Advice or other advice agency available in your area.

I did put in the pension as other income but I must have done something wrong. My daughter lives with us but she is 25. 

calcotti

Under UC as a couple you have a basic monthly allowance of £498.89/month. Your pension income of £950/month is deducted from this so there is nil entitlement.

If you have a Work Capability Assessment and are found to have Limited Capability For Work and Work Related Activity your maximum UC would rise to £836.09/month so there would still be no entitlement due to the pension income.

A monthly pension of £950/month is £219.23/week. For ESA this results in a deduction of £67.12/week. In the ESA Support Group you would have a maximum entitlement of £111.65/week so after the pension deduction would be entitled to £44.53.