Universal credit query

Janes888

Asking on behalf of my friends dad.

Friends dad was previously in receipt of UC but needed money urgently so last year took 25% off his pension and £12500 tax free and also took £12500 this current tax year.  His UC got stopped due to him taking his pension.  He only had 100k pension so has a little over 50k remaining and as he is still a fair few years away from state pension age he is planning to stop taking payments from next tax year and apply again for UC and he was wondering if he would be able to do this or would he be advised to continue taking his pension.  He has a mortgage free property but very low savings less than 5k.

Caz3121

assuming this was a lump sum - did he declare when his bank balance was over £6k and was his UC reduced at that point?

NedS

Any pension withdrawals will affect his UC payments. Any lump sums are treated as capital, and he must declare if he has capital over £6,000. Capital over £16,000 will end the claim. He must accurately declare all of his capital/savings.

Any regular pension income is treated as unearned income and will be deduced pound for pound from any UC entitlement. Again he must declare that he has pension income.

As to your question - he does not have to take his pension. If he stops taking his pension, he can claim UC again as long as his capital is below £16,000. DWP cannot insist he takes his pension before state pension age so he is free to stop taking it if he can afford to live on UC alone.

Janes888

Caz3121 said:

assuming this was a lump sum - did he declare when his bank balance was over £6k and was his UC reduced at that point?

he declared it and UC was stopped as he was taking a monthly amount rather than the 12500 in a one off payment

calcotti

Janes888 said:

Caz3121 said:

assuming this was a lump sum - did he declare when his bank balance was over £6k and was his UC reduced at that point?

he declared it and UC was stopped as he was taking a monthly amount rather than the 12500 in a one off payment

Unfortunately that was a bad decision to make because all he has done is decrease his future pension and lost his UC for the time being. As Ned says he can simply stop the regular payments any time he wants and claim UC again provided his capital is below £16,000 (anything over £6,000 will reduce the UC).

Janes888

NedS said:

Any pension withdrawals will affect his UC payments. Any lump sums are treated as capital, and he must declare if he has capital over £6,000. Capital over £16,000 will end the claim. He must accurately declare all of his capital/savings.

Any regular pension income is treated as unearned income and will be deduced pound for pound from any UC entitlement. Again he must declare that he has pension income.

As to your question - he does not have to take his pension. If he stops taking his pension, he can claim UC again as long as his capital is below £16,000. DWP cannot insist he takes his pension before state pension age so he is free to stop taking it if he can afford to live on UC alone.

thanks his capital is at 5000 he had took the payments to pay off his debts so now his capital is less than 16k, his house worth 500k with no mortgage and he gets basic rate of both elements of PIP. 

calcotti

The house he lives in is ignored. Unfortunately he will have to go through the Work Capability Work Assessment again when he makes a new claim and if found to have LCWRA will not be paid the extra money for the first three months.