25% Tax Free Pension Lump Sum and Universal Credit (LCWRA)

LucaPuca

I am in the process of taking a 25% Tax Free Lump Sum from my Private Pension which will probably be about £21500. I already receive Personal Independence Payment as I am a registered Disabled and am also in receipt of Universal Credit and as part of that I receive LCWRA (Which stands for Limited Capability for Work Related Activity) whereby my condition means I can not work or do anything to get ready for work. So basically early retirement due to ill health. My question is will my 25% Tax Free lump sum affect me receiving LCWRA (UNIVERSAL CREDIT)

Angie

HillStreetBlues

The £21,500 will be classed as capital.
If you have more than £16k in capital by the end of the Assessment Period your UC claim will end.
If you have any outstanding debts or mortgage this can be paid off, but would need to be done in the AP  the money was paid.

LucaPuca

So if example I have debt that is approx £7000 and the pension of £21500 was used towards paying that reducing it to approx £14000 does that mean I will still be able to still continue to receive Universal Credit

LucaPuca

Also I forgot to ask ...Do you need to prove to DWP  and or Universal credit of the debts you are paying off 

HillStreetBlues

LucaPuca said:

So if example I have debt that is approx £7000 and the pension of £21500 was used towards paying that reducing it to approx £14000 does that mean I will still be able to still continue to receive Universal Credit

Yes, as long as the £7,000 was paid in the AP you got the pension money.
You would then declare £14,000 and have a deduction of £4.35 per month for every (or part) of £250 over £6k
So deduction for £8k would be £139.20 per month

HillStreetBlues

LucaPuca said:

Also I forgot to ask ...Do you need to prove to DWP  and or Universal credit of the debts you are paying off 

You might have to show where the money (£7k) went, to prove it wasn't deprivation of capital.

LucaPuca

Sorry for sounding thick ....... So am I basically better off just accessing £16k from my pension each year then to still continue to receive £ 259.00 every 2 weeks from universal credit. I also receive PIP which is £272.40 per month I take it it wont affect that.

poppy12345

PIP isn't affected. Drawing down £21,500 and paying off the £7,000 debt will not be deprivation of capital because paying off debt when claiming UC is allowed.

HillStreetBlues

LucaPuca said:

Sorry for sounding thick ....... So am I basically better off just accessing £16k from my pension each year then to still continue to receive £ 259.00 every 2 weeks from universal credit. I also receive PIP which is £272.40 per month I take it it wont affect that.

No,
Danger is a regular payment would be then classed as income, I'm not sure if a yearly payment would be classed as regular, hopefully someone can advise.

even if it wasn't considered income,  you would still get the deduction as your capital would be over £6K.

PIP is ignored as income, but money does become capital in the next UC period it was paid. 

LucaPuca

Another question ... My partner who is also my Carer due to my disability is a part time cleaner and is a low irregular earner as her wages is irregular each month. This is why we claimed for Universal Credit. So she get Carers Allowance. but not all the time cos if her wages goes over their benefit cap she does not get it but if it stays under £528 she does. Will me taking monies from my Private Pension affect her receiving Carers Allowance??

My Universal credit amount differs each month as it very much depends on my partners monthly wages and is paid on the 15th of every month - and I understand my pension withdrawal will effect that

However, In addition I also get LCWRA of £259.00 every 2 weeks due to my Disability which places me under the  limited capability to work category.

 My Question is ....  I know that my withdrawal of my private pension of 25% tax free will affect Universal Credit but will it also affect my monthly Limited Capability to Work  payment of £518.00 per month?? and my partner receiving Carers??

HillStreetBlues

I'm not well versed in CA  so will let someone else answer that.

UC is paid as a whole, so if you have over £16k capital all UC payments stop including LCW and any Housing Element (if claimed) will end.
PIP is non-means tested, that would remain in place.