Can UC force me to reduce my pension contributions?

huckster

I am not sure Government had considered that people on modest incomes  would be in a position to be paying very much into a private pension.

Best route to take, if people believe they are not being treated in line with legislation  is to use the official DWP complaints process. That way  a Complaints Resolution Manager is allocated  to respond.

kaMelo

It could make a difference if pension contributions are made via net pay rather than relief at source as contributions via net pay will not show up in gross pay reported via RTI.

calcotti

kaMelo said:

It could make a difference if pension contributions are made via net pay rather than relief at source as contributions via net pay will not show up in gross pay reported via RTI.

Good point, hadn’t thought of that.

Dazed_and_C0nfused

I don't know if DWP use this info but the Real Time Information submissions an employer has to make includes gross pay for NI purposes.  Which would be before any net pay pension contributions are deducted.

https://www.gov.uk/government/publications/real-time-information-internet-submissions-2023-to-2024-technical-specifications

kaMelo

Hmm, after reading that now I'm not so sure. 
I assumed, dangerous I know, that net pay operated similar to salary sacrifice but it's clear from the link posted by @Dazed_and_C0nfused that HMRC will have the full figures including net pay deductions.
However, digging out some old NHS payslips and P60, whilst gross pay, including pension contributions, are shown on the payslips they are not included in the tax/NI totals on the P60. 

Given that, I've no idea what data HMRC would give to DWP

huckster

On the HMRC data, there are 2 pension related data fields. The company pension scheme is deducted when calculating net pay UC considers. 

However as has been pointed out, for the UC working group it is gross pay that should be looked at.

I notice from HMRC guide that the employers confirm hours worked per week. See item 54 on the link. So I wonder if DWP simply knows the hours and does a gross pay calculation based on NMW. And claimant stays in intensive, if they are working below 16 hours at NMW.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/915807/RTI_Data_Item_Guide_21-22_v1-0.pdf

FusionFury

I don't think they can force you to do anything? 

Aaron77r

calcotti said:

AET and CET should be assessed against gross income. Therefore pension contributions (however they are made) should make no difference.

if they are using net earnings after pension deductions when looks at AET or CET that is not in accordance with the legislation.

Thanks for that, however there is some poor/contradictionary writing in the 2nd link (i can't post links yet, it's paper 0365/090) under the heading  'Administrative Earnings Threshold' that mentions 'gross taxable pay' as opposed to gross pay.

'Both amounts are based on GROSS TAXABLE pay and the AET must be amended every April as part of the annual uprating of benefits. The AET does not apply to selfemployed earnings.  A claimant will be allocated to the Light Touch regime if either their individual earnings or if in a couple their household earnings, are above the relevant threshold amounts, but below the CET, for example: 

• a single claimant with gross earnings at or over the AET but below their CET 

• a claimant in a household with total gross household earnings above the household AET but below the household CET – this applies equally to both claimants in the household regardless which of them is working (for example: one claimant may not be working at all or be working with earnings below the AET) 

Therefore despite all other legislation mentioning GROSS pay, i've been informed they will use the single mention of GROSS TAXABLE PAY (net pay+national insurance contributions+income tax if applicable) which allegedly ignores pension contributions so they can put people into the intensive work search group if their pension contributions put them below the rapidly rising thresholds! 

Not sure if paper 0365/093 supersedes this or how best anyone could challenge it? Mandatory reconsideration, local MP e.g?

the_pink_panther_2

Aaron77r said:

calcotti said:

AET and CET should be assessed against gross income. Therefore pension contributions (however they are made) should make no difference.

if they are using net earnings after pension deductions when looks at AET or CET that is not in accordance with the legislation.

Thanks for that, however there is some poor/contradictionary writing in the 2nd link (i can't post links yet, it's paper 0365/090) under the heading  'Administrative Earnings Threshold' that mentions 'gross taxable pay' as opposed to gross pay.

'Both amounts are based on GROSS TAXABLE pay and the AET must be amended every April as part of the annual uprating of benefits. The AET does not apply to selfemployed earnings.  A claimant will be allocated to the Light Touch regime if either their individual earnings or if in a couple their household earnings, are above the relevant threshold amounts, but below the CET, for example: 

• a single claimant with gross earnings at or over the AET but below their CET 

• a claimant in a household with total gross household earnings above the household AET but below the household CET – this applies equally to both claimants in the household regardless which of them is working (for example: one claimant may not be working at all or be working with earnings below the AET) 

Therefore despite all other legislation mentioning GROSS pay, i've been informed they will use the single mention of GROSS TAXABLE PAY (net pay+national insurance contributions+income tax if applicable) which allegedly ignores pension contributions so they can put people into the intensive work search group if their pension contributions put them below the rapidly rising thresholds! 

Not sure if paper 0365/093 supersedes this or how best anyone could challenge it? Mandatory reconsideration, local MP e.g?

Did you ever manage to sort this out? Am asking because I think I'll come across a similar in the near future.

Aaron77r

the_pink_panther_2 said:

Aaron77r said:

calcotti said:

AET and CET should be assessed against gross income. Therefore pension contributions (however they are made) should make no difference.

if they are using net earnings after pension deductions when looks at AET or CET that is not in accordance with the legislation.

Thanks for that, however there is some poor/contradictionary writing in the 2nd link (i can't post links yet, it's paper 0365/090) under the heading  'Administrative Earnings Threshold' that mentions 'gross taxable pay' as opposed to gross pay.

'Both amounts are based on GROSS TAXABLE pay and the AET must be amended every April as part of the annual uprating of benefits. The AET does not apply to selfemployed earnings.  A claimant will be allocated to the Light Touch regime if either their individual earnings or if in a couple their household earnings, are above the relevant threshold amounts, but below the CET, for example: 

• a single claimant with gross earnings at or over the AET but below their CET 

• a claimant in a household with total gross household earnings above the household AET but below the household CET – this applies equally to both claimants in the household regardless which of them is working (for example: one claimant may not be working at all or be working with earnings below the AET) 

Therefore despite all other legislation mentioning GROSS pay, i've been informed they will use the single mention of GROSS TAXABLE PAY (net pay+national insurance contributions+income tax if applicable) which allegedly ignores pension contributions so they can put people into the intensive work search group if their pension contributions put them below the rapidly rising thresholds! 

Not sure if paper 0365/093 supersedes this or how best anyone could challenge it? Mandatory reconsideration, local MP e.g?

Did you ever manage to sort this out? Am asking because I think I'll come across a similar in the near future.

No but should be changing jobs in a few weeks which will improve our earnings. It's unfortunate for anyone wanting to try and save for the future but someone determined may get some success with a lengthy  challenge via their MP etc