Universal Credit and SIPP

throughtheblue

Firstly forgive me if I'm asking questions which have been covered. I have been reading a lot but I'm finding resources unclear. I'm also asking on behalf of a parent. 
Like many people my Mum has been made redundant and will be needing financial support until she finds employment again.
I'm aware universal credit is accessible if you have capital/savings below £16k. I presumed my Mum would be able to access universal credit easily enough as she is receiving  £5k in redundancy money, has no savings and is also renting. However she's been told that her SIPP (self investment pension plan) will be counted as capital against her claim. Now she has accessed the SIPP in the past 2 years due to having credit card debts of £10k but as this is her only form of a pension my Mum doesn't draw money out of it as an income, intends to use it for her retirement  and also manages it through investments so it's worth is always in a state of flux. Is it right that the hole SIPP total is counted as capital, or just what she's withdrawn given that any day it could go from £10k to £1? Secondly, my Mum still has £9k in credit card debt, is this taken off when calculating an individuals capital or forgotten about? 

To summarise she has: 5k redundancy, 10k SIPP invested in shares, 9k credit card debt, zero savings and is renting. 
To anyone who takes the time and effort to reply I'm extremely grateful. I'm trying to work out what I can whilst working full-time and have had limited luck waiting on helplines due to the current situation. 

calcotti

If she is below state pension age any money in an approved pension fund will be ignored. Who told her it would be taken into account? 
Credit account debt is ignored. Other capital can be used to pay off debt without being considered deprivation of capital.

throughtheblue

calcotti said:

If she is below state pension age any money in an approved pension fund will be ignored. Who told her it would be taken into account? 
Credit account debt is ignored. Other capital can be used to pay off debt without being considered deprivation of capital.

Thanks for taking the time to reply, it's appreciated. She's below state pension age. So the money in her SIPP should not be included as capital? It's technically accessible although incurring fees and tax, but she obviously wants it for the future being her only pension. She said she was told that by citizens advice today. It's quite hard finding information relating to SIPP's and UC specifically. 

calcotti

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/899062/admh5.pdf
See paragraph 5171 onwards.
I am very disappointed if somebody at Citizens Advice told her a SIPP counts as capital. The key thing is whether it is in an approved pension scheme.
The government does not want people to use up their pensions funds before pension age.

H5174 Whilst a claimant’s pension pot is held by the pension provider then the value of the right to that sum falls to be disregarded as capital for the purposes of UC.

throughtheblue

Thanks for that. As I suspected only if she started to take drawdowns would it be considered as capital. I wonder if they count previous drawdowns as capital as she's done that in the past but to reduce credit card debt. 

throughtheblue

calcotti said:

H5174 Whilst a claimant’s pension pot is held by the pension provider then the value of the right to that sum falls to be disregarded as capital for the purposes of UC.

Lastly, what is considered under 'pension provider'? She manages her SIPP through a stockbroker, where she can invest or let them manage it. Is that moving away from 'pension provider'? 

throughtheblue

Actually that information all comes under the heading 'Personal Pensions' so I assume it's covered.

calcotti

throughtheblue said:

Thanks for that. As I suspected only if she started to take drawdowns would it be considered as capital. I wonder if they count previous drawdowns as capital as she's done that in the past but to reduce credit card debt. 

It was capital when it was drawn down but has been used to pay off debt so she no longer has it. Previous capital is not counted unless the claimant is considered to have deprived themselves of it in order to increase benefit payable. Paying off debt is never deprivation of capital.

throughtheblue said: Lastly, what is considered under 'pension provider'? She manages her SIPP through a stockbroker, where she can invest or let them manage it. Is that moving away from 'pension provider'? 

if the SIPP is an approved pension scheme it is ignored. If it is just a share portfolio managed on her behalf the it is counted as capital regardless of what it is intended for - however a share portfolio is not a a SIPP..

Galloglass

Now she has accessed the SIPP in the past 2 years

I've never come across a SIPP that allows drawdowns prior to retirement age being reached. Being able to dip in and out of capital seems contrary to most pension schemes. Suggest that needs clarified as to whether it is an Approved Scheme within the meaning of the regulations. 

calcotti

Galloglass said:

Now she has accessed the SIPP in the past 2 years

I've never come across a SIPP that allows drawdowns prior to retirement age being reached. Being able to dip in and out of capital seems contrary to most pension schemes. Suggest that needs clarified as to whether it is an Approved Scheme within the meaning of the regulations. 

Pension freedoms allow pension drawdowns from the age of 55. I would be very surprised if any approved pension did not allow this. https://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-choices/when-can-i-take-money-from-my-pension. 
It’s because of these ‘freedoms’ that there have to be clear rules about pension capital and how withdrawals are treated. For withdrawals, ad hoc withdrawals are treated as capital, regular withdrawals are treated as income.

Galloglass

Understand your point @calcotti but was just pushing the OP towards a bit of clarity on the points you've raised about it possibly being a portfolio.