Lump Sum Pension Payment Universal Credit

Megan7898

Long post alert
I am appointee for my sister who has slight learning difficulties but can still make decisions and lives independently with family support. We had a review last week had to declare bank accounts and provide 4 months statements and all was ok. She has been on UC since Oct 2020. I was unaware of a number of rules until the review e.g what counted as savings including current account balances, counting them at end of assessment period and only learned when that actually was last week. Situation is that in Dec 2021, my sister drew £10k tax free lump sum from pension which was used to do her flat top to bottom as in a deteriorated state and also to take her on holiday and the money was spent over a six week period. In June 2022 she drew another tax free lump sum from pension of £20k as my husband and I purchased a static caravan with the primary reason to take my sister to at weekends which has been a god send for her. This money was received and used as payment for the caravan within 2 weeks. I was unaware that I may have needed to report this as only now realised all the rules. I have looked at each assessment period since the start of her claim in Oct 2020 and looked at the balances on each account and had a financial friend go through it all with me and there is only 1 month 11th Dec 2021 where the total savings go over £6000 to £7186 which would mean a repayment of £21.75 over 3 years ago. Before I did these calculations, I panicked and put a message on her jnl last week on 5th March explaining the lump sum payments and concerned that this would mean an overpayment and that I was worried about it and also phoned the helpline on Monday who said messages have been read by case worker and review complete on 7th March so not much use as the review was the 4 month review. Not sure what else to do now. Also wondering if my sister contributing to the caravan that my husband and I purchased will be ok because if not then this would end up being treated as "Notional capital" which would mean a large overpayment. Concerned.

kaMelo

I don't see any problem with her spending the money on her flat, the caravan however looks more problematic.

 

If the caravan belongs to you and your husband then your sister has effectively just given away £20,000. If so it wouldn't be notional capital rules, her entitlement to all means tested benefits should have ended in June 2022.

Could you provide some clarity around the caravan ownership, as in did your sister purchase a share in the ownership for her £20,000 with documentation from that time to prove that.

Megan7898

No documentation in my sisters name at all. Did not even think of this at the time. She uses it every weekend we can for the 11 months the site is open and we have worked out the running costs for the year and we split these 3 ways monthly, just did the estimate for this year and it is £151 each and this is a transfer each month from her bank to mine. The £20k was drawn down and spent for the specific purpose of this and didn't think about it being a problem at the time as thought the tax free lump sum payments were not linked to UC savings as I knew they were not classed as income. Also this payment out within 2 weeks for the specific purposes. Not sure what to do and if it's not notional capital then what is it as the money was spent in June 2022. Very confused.

HillStreetBlues

Megan7898 said:

No documentation in my sisters name at all. Did not even think of this at the time. She uses it every weekend we can for the 11 months the site is open and we have worked out the running costs for the year and we split these 3 ways monthly, just did the estimate for this year and it is £151 each and this is a transfer each month from her bank to mine. The £20k was drawn down and spent for the specific purpose of this and didn't think about it being a problem at the time as thought the tax free lump sum payments were not linked to UC savings as I knew they were not classed as income. Also this payment out within 2 weeks for the specific purposes. Not sure what to do and if it's not notional capital then what is it as the money was spent in June 2022. Very confused.

In the cold light of day what has happened is your sister has given you £20k so you could buy a caravan. I'm struggling to see how this won't be classed as Deprivation of Capital.
You state your sister has slight learning difficulties and you are her appointee, who idea was it for her to give that money away?

Megan7898

She wanted to contribute as one of the primary reasons were for a place to take her away to which we do and have done most weekends since we purchased it. She was present when we had a face to face meeting with the pension advisor and was perfectly able to discuss that she wanted to draw the tax free money down and the purpose. If we had known that this was going to be problematic then we would never have done this at all and would have looked at other options to purchase the caravan. I would never have thought anything about this had I not had a review last week and started to learn and understand the rules. This is a genuine error with no intent to do anything wrong.

Megan7898

Also to clarify the £20k was a contribution towards the cost of the caravan which the purchase price and buying all the furnishings, bedding, crockery items etc came to approx £55k. As I said a place for us to take my sister was the prime purpose to spend time together. My sister worked in a placement until being paid off in Sept 2020 during covid. She was then isolated after working in various placements for approx 30yrs. This caravan has given her a purpose and valuable time for us to spend as a family. I'm extremely concerned about this situation which as I said would never have crossed my mind had we not had a review last week and I had started to understand the rules of UC which made me think of the tax free lump sum payments. No one explained any of this to us when we had to apply for UC in Oct 2020. We had a work coach for a few months then my sister received LCWRA in Jan 2021 then no one contacted us again until the UC review last week so 4 yrs without anyone checking in.

peteuk

Does a static caravan equate to a second home that she’s not living in?  However if the £20K purchase is not seen as DOC does it now become capital.   What happens to it when you’re not in it?

Regardless of the benefit it has brought her, I fear youve both had an idea and not 100% realised the implications that has.   £20K in a pension pot is better than £20K of caravan.  You could now sell the van and she would have in theory £20K in the bank. 

TELLIT01

A potential concern is that as her appointee the OP may be considered liable for any overpayment.  Whether that would be jointly with the claimant or solely I don't know.

HillStreetBlues

Megan7898 said:

Also to clarify the £20k was a contribution towards the cost of the caravan which the purchase price and buying all the furnishings, bedding, crockery items etc came to approx £55k. As I said a place for us to take my sister was the prime purpose to spend time together. My sister worked in a placement until being paid off in Sept 2020 during covid. She was then isolated after working in various placements for approx 30yrs. This caravan has given her a purpose and valuable time for us to spend as a family. I'm extremely concerned about this situation which as I said would never have crossed my mind had we not had a review last week and I had started to understand the rules of UC which made me think of the tax free lump sum payments. No one explained any of this to us when we had to apply for UC in Oct 2020. We had a work coach for a few months then my sister received LCWRA in Jan 2021 then no one contacted us again until the UC review last week so 4 yrs without anyone checking in.

The issue I see that it won't been seen as a contribution towards the cost of the caravan, as she isn't part owner.
Buying a caravan could be seen as DoC but might be accepted that because of everything  that purchase was justified, but she hasn't purchased anything, so will be deemed as giving the money away and that's much harder to defend.

Megan7898

This situation is making me ill and I now don't know what to do. I have left a jnl message twice 4th and 5th March I declared the bank account and it's use to the review agent and provided the bank document showing no transactions and bal zero for last 12 months. I have phoned the helpline which was of no use as they said case worker read jnl and review complete as per jnl message on 7th March. As a family we do all we can to support my sister and I'm beating myself up for this situation that we all thought was ok and not linked to Universal credit has turned out. As I said if review hadn't happened I would have been none the wiser. I really find universal credit very confusing to navigate. We do have an option in order to give more flexibility in terms of traveling etc with my sister as we take her away often abroad (which I also didn't know I had to report) is that she is 61 and could come off universal credit and start to draw monthly personal pension as she has more than enough to live as I am concerned the longer this goes on and depending how the £20k is classed that the overpayment becomes more and more. So worried and concerned and don't know what to do.

born_again

While easy to say for me.

Sit back & try not worry for now. What has been done, can not be undone. So you will just have to wait it out till DWP make their decision. 

Please do not take this the wrong way, but this is something that is in the commitments that are agreed to when starting UC

changes to your savings, investments and how much money you have

https://www.gov.uk/guidance/universal-credit-money-savings-and-investments#property

You must tell us about any change in your money, savings and investments or their value. This may include:

• inheritance payments
• redundancy pay
• pension and life insurance lump sums

We need to know about the value of any property that you have a financial interest in, for example:

• holiday homes
• caravans