UC, Occupational Pension, and Capital

ThriftyAberdeen

Hi all,

I previously had a post and got some very useful advice and hoping to get someone to sense check guide me a little further if anyone has any experience they are able to share?

Short summary, MIL is 61, is on UC (plus the disabled premium), and Adult Disability. She didn’t realise she could claim her pension at 60 until we started making enquiries earlier this year. 

She opted for a larger lump sum (to pay off debt which we understand won’t be DoC), she also paid off her daughters car (which we feel she can justify as it coming to the end of PCP) and daughter is used as care giver.

She is going to reach her assessment period end date soon but with two distinct “pots” of money in her bank. One is around £4000 which was her backdated income from retirement age until now, the other is around £9000 from the remainder of her lump sum.

I have a few questions:

1. Am I right in saying that the £4000 is income for this month and so will be ignored as capital under next assessment period?
2. Given this is income that was due in over the past x number of months, will she likely receive a fine or sanction for failing to disclose? 

3. With this £4000, can we simply give this back to UC in one payment to cover the overpayment, or is the case her UC will be reduced until a clawback has been made over the next few months?
4. Although disregarded for means testing, is her ADP counted in the same way as income is? I.e does she have a month to spend it in the same way she would do income?

thanks in advance 

Spoonie_Turtle

I can only help with 4.: Yes, anything left from a payment in one AP becomes capital by the end of the next.

itsthelittlethings

The pension she is getting is income - has she notified UC about that?

itsthelittlethings

She’s got 13k in her bank. Tread carefully.

NedS

If UC decide there has been an overpayment, this will be passed to debt management. You can then arrange repayment of the debt with debt management. One of the options available is immediate repayment of the debt in full, which would reduce any capital and would seem logical.

I am not sure how UC will treat the £4000 of backdated pension income, but MiL does need to declare that they are in receipt of a pension immediately, together with a separate declaration of their capital (and UC will decide if any capital can be disregarded).

ThriftyAberdeen

Yes, she only received it a few days ago and I’m due to go over to her house to help her do the declarations in the next day or so before the assessment period runs out. 

She’s not fussed about being over the £6k limit and understands this will reduce her UC in the meantime. 

huckster

This is a bit of a mess.
 
The £4000 back pay of pension should be included as other income in the relevant assessment periods it should have been due, with it being deducted £1 for £1 from benefit.  Then from the AP after the regular pension amount will be deducted £1 for £1 from benefit.  ( edit correction, as Yamor has correctly stated other income such as pensions is calculated as monthly amount due)

She will need to report several changes of circumstances under money savings and investments. First reporting is the lump sum of pension plus other money savings and investments held at the end date of the first assessment period when the lump sum was received. Don't include £4000 pension back payment, as that needs to be reported as income via journal.

And then report further change to money savings and investments at end of subsequent AP's. Anything left over from the £4000 backpayment of pension will need to be included in reporting at the end of the next AP after it was received.

UC will ask for copies of Bank Statements and other relevant information, so a Decision Maker can make decisions on capital to be taken into consideration.

itsthelittlethings

So basically she got £4000 (no UC for one assessment period), and now has about £9000 (loses £12 each month?).

itsthelittlethings

My bad. Loses £50 a month due to having 3k over the threshold.

Yamor

Unearned income is NEVER calculated based on when the payment is received. Only earned income is calculated in that way.
Therefore, the £4k back payment will be taken into account over the period it is paid for, so they should revise and reduce her UC entitlement back to when the pension entitlement began.

She will not be fined or sanctioned.

UC will raise an overpayment, and would normally deduct it slowly over coming months, but she should be able to arrange with them to pay off the overpayment in one go.

The ADP, despite not being included as income for UC purposes, will still only transform into capital from the following AP.

The only thing which isn't so clear-cut is when the £4k should count as capital. UC are likely to include it as capital from the AP following the AP in which it was received. However, there is a decent argument which she could make (following the case law) that it should only become capital following a period of time equal to the amount of time in respect of which it has been taken into account. So, if for example the £4k payment covers 18 months of her pension entitlement, then it should only be included in her capital in 18 months time.

huckster

@Yamor

Earlier post corrected.

As Yamor has stated other income such as pension is deducted based on monthly amount due. From ADM guidance

General H5200 The general rule is that unearned income has to be calculated as a monthly amount 1. The guidance here does not apply to student income 2. Note: Month means calendar month
3. 1 UC Regs, reg 73(1); 2 reg 73(4); 3 Interpretation Act 1978, Sch 1


 H5201 Where a payment of income is made not on a monthly basis then the amount has to be calculated as a monthly figure1.

 Note: DMs should apply the appropriate supersession rule where an income commences or ends during an assessment period. ADM Chapter A4 provides guidance on supersession.

 H5202 This means that 1. weekly payments are multiplied by 52 and divided by 121 2. four weekly payments are multiplied by 13 and divided by 122 3. three monthly payments are multiplied by 4 and divided by 123 4. annual payments are divided by124. 1 UC Regs, reg 73(2) 1 UC Regs, reg 73(2)(a); 2 reg 73(2)(b); 3 reg 73(2)(c); 4 reg 73(2)(d