Junior SIPPs contributions and Universal Credit

4queens

I receive State Pension and my wife is a Carer caring for me.  We transferred over to UC since we are on certain benefits e.g. Child Tax Credits and my wife is under pension age (Mixed Age Couple).   Can she take up a Junior SIPPs for our child by making an initial one off payment to start, and subsequently pay in £100 monthly? She gets around £380 monthly for being a carer.  The money is in our child's name and under DWP and HMRC rules is disregarded and not taken into account when claiming benefits.  As advised from my local Council benefits advisors and the community law centre, this should be ok as long as the transaction does not appear to show an obvious intention of deprivation of capital, as the amount of savings can affect what you get from UC.

Any opinions and comments are greatly appreciated.

Spoonie_Turtle

4queens said:

I receive State Pension and my wife is a Carer caring for me.  We transferred over to UC since we are on certain benefits e.g. Child Tax Credits and my wife is under pension age (Mixed Age Couple).   Can she take up a Junior SIPPs for our child by making an initial one off payment to start, and subsequently pay in £100 monthly? She gets around £380 monthly for being a carer.  The money is in our child's name and under DWP and HMRC rules is disregarded and not taken into account when claiming benefits.  As advised from my local Council benefits advisors and the community law centre, this should be ok as long as the transaction does not appear to show an obvious intention of deprivation of capital, as the amount of savings can affect what you get from UC.

Any opinions and comments are greatly appreciated.

Often the reason people think about paying into specifically a pension pot whilst claiming UC is to legitimately reduce their deduction for earnings and increase their UC payments.  If you were thinking of that, based on the information given it can't apply to you because you don't have earnings from which to make any pension payment deductions, your wife's Carers Allowance is classed as 'unearned income'.  (Even though it is worked very hard for, it's because it's a state benefit, like your pension is and they are treated the same way for UC, deducted in full.)

In terms of whether it would be disregarded as capital, others who know more about Junior SIPPs will need to confirm but from what I can see, it should be since it'll be in your child's name and inaccessible to you.  Assuming you can afford the monthly payments without eating into any savings over £6,000, it wouldn't be deprivation of capital as you'd just be paying monthly out of your income, and you can do whatever you want with your income.

Keep_pedalling

Why a SIPP? Might be a good idea for wealthy people who can also help their children financially with things like JISA, first car purchase and getting on the housing ladder, but if you put money in a SIPP it is locked away until your child is in their late 50s and by that time will hopefully be in a far better financial position than when they are in their late teens and early twenties. 

born_again

What you do with the money after you have got your benefits is up to you, within reason.
ie you can't just send money to someone else to keep yourself below limits.

But how much is the initial one off payment to start?
Will this have a effect your savings?

TBH, you needs are greater than theirs at the moment & they have their whole life in front of them to build for their future.
Yes it is nice to give them a good start, but not at your own deprivation.

4queens

Keep_pedalling said:

Why a SIPP? Might be a good idea for wealthy people who can also help their children financially with things like JISA, first car purchase and getting on the housing ladder, but if you put money in a SIPP it is locked away until your child is in their late 50s and by that time will hopefully be in a far better financial position than when they are in their late teens and early twenties. 

Your point is duly noted.   We do not know what would happen half a century from now, especially the financial aspects.a

Spoonie_Turtle said:

4queens said:

I receive State Pension and my wife is a Carer caring for me.  We transferred over to UC since we are on certain benefits e.g. Child Tax Credits and my wife is under pension age (Mixed Age Couple).   Can she take up a Junior SIPPs for our child by making an initial one off payment to start, and subsequently pay in £100 monthly? She gets around £380 monthly for being a carer.  The money is in our child's name and under DWP and HMRC rules is disregarded and not taken into account when claiming benefits.  As advised from my local Council benefits advisors and the community law centre, this should be ok as long as the transaction does not appear to show an obvious intention of deprivation of capital, as the amount of savings can affect what you get from UC.

Any opinions and comments are greatly appreciated.

Often the reason people think about paying into specifically a pension pot whilst claiming UC is to legitimately reduce their deduction for earnings and increase their UC payments.  If you were thinking of that, based on the information given it can't apply to you because you don't have earnings from which to make any pension payment deductions, your wife's Carers Allowance is classed as 'unearned income'.  (Even though it is worked very hard for, it's because it's a state benefit, like your pension is and they are treated the same way for UC, deducted in full.)

In terms of whether it would be disregarded as capital, others who know more about Junior SIPPs will need to confirm but from what I can see, it should be since it'll be in your child's name and inaccessible to you.  Assuming you can afford the monthly payments without eating into any savings over £6,000, it wouldn't be deprivation of capital as you'd just be paying monthly out of your income, and you can do whatever you want with your income.

@ Spoonie Turtle: Enlightening info re: the income aspect.  Appreciated.

Spoonie_Turtle said:

4queens said:

I receive State Pension and my wife is a Carer caring for me.  We transferred over to UC since we are on certain benefits e.g. Child Tax Credits and my wife is under pension age (Mixed Age Couple).   Can she take up a Junior SIPPs for our child by making an initial one off payment to start, and subsequently pay in £100 monthly? She gets around £380 monthly for being a carer.  The money is in our child's name and under DWP and HMRC rules is disregarded and not taken into account when claiming benefits.  As advised from my local Council benefits advisors and the community law centre, this should be ok as long as the transaction does not appear to show an obvious intention of deprivation of capital, as the amount of savings can affect what you get from UC.

Any opinions and comments are greatly appreciated.

Often the reason people think about paying into specifically a pension pot whilst claiming UC is to legitimately reduce their deduction for earnings and increase their UC payments.  If you were thinking of that, based on the information given it can't apply to you because you don't have earnings from which to make any pension payment deductions, your wife's Carers Allowance is classed as 'unearned income'.  (Even though it is worked very hard for, it's because it's a state benefit, like your pension is and they are treated the same way for UC, deducted in full.)

In terms of whether it would be disregarded as capital, others who know more about Junior SIPPs will need to confirm but from what I can see, it should be since it'll be in your child's name and inaccessible to you.  Assuming you can afford the monthly payments without eating into any savings over £6,000, it wouldn't be deprivation of capital as you'd just be paying monthly out of your income, and you can do whatever you want with your income.

nd welfare state of the country.  A lot will change out of recognition

Spoonie_Turtle

born_again said:

What you do with the money after you have got your benefits is up to you, within reason.
ie you can't just send money to someone else to keep yourself below limits.

Actually you can, as long as it's not sending it to them 'for safe keeping' and it truly does become completely theirs - what someone does with their income is entirely up to them and UC have no basis to question it (unless they suspect you're actually funneling it off to somewhere you still have access to it and are hiding savings; or as mentioned above, if you're having to reduce savings above £6k to live).

In this case the OP would have no access to it so it would definitely become the children's money.

The wisdom of doing so on a practical level though is of course a different matter, and obviously should only be done if they really can afford it.