UC & Private pension contributions.

marcustownsend

Hi all. Im on Universal Credit and want to pay into a private pension. 

I’ve tried asking UC how this would work, how I’d declare this and what would be affected and they can’t seem to give me a clear answer.

Any help would be greatly appreciated.

Thanks in advance,

Marcus

Dazed_and_C0nfused

marcustownsend said:

Hi all. Im on Universal Credit and want to pay into a private pension. 

I’ve tried asking UC how this would work, how I’d declare this and what would be affected and they can’t seem to give me a clear answer.

Any help would be greatly appreciated.

Thanks in advance,

Marcus

There are several threads about this.  Expect to spend a lot of time having to explain things to DWP and long waits for any money that you are entitled to as a result of making these contributions.

And for that to be repeated month after month.

itsthelittlethings

Why would you need to declare it?

If you get tax relief from the contributions that would surely be dealt with by HMRC (or the pension provider I would assume).

huckster

It is because UC allows claimants to pay into a pension from their employmemt earnings and this is 100% relievable.  I.e. if they paid £200 per month into a pension, UC would reduce earnings taken into account when calculating UC payments by £200.

I agree that some would take advantage of this as it is potentially receiving more benefit, when saving away money into a future pension. 

There is a reasonable test to this, which could be applied by a Decision Maker.

UC does not have a proper system process for this. It is a case of sending a journal message regarding payment and asking UC to provide an upload document to do action, so private pension information can be supplied, so that the pension being paid into amount can be discounted from earnings. 

peteuk

itsthelittlethings said:

Why would you need to declare it?

If you get tax relief from the contributions that would surely be dealt with by HMRC (or the pension provider I would assume).

Voluntary payments are treated differently, so UC will take the wage amount after tax/ni/pension payment, but if you then voluntarily pay extra is deducted from you wage (or paid from you account). Which doesnt get taken into account by UC.

itsthelittlethings

That makes sense, thanks. Always good to save into a pension.

Spoonie_Turtle

[For the sake of clarity, the above applies to paying earnings into a private pension.  If a person has no earnings and wants to pay some of their benefits (or other income classed as 'unearned income') into a private pension then it has no effect on UC whatsoever.]

Grumpy_chap

Spoonie_Turtle said:

[For the sake of clarity, the above applies to paying earnings into a private pension.  If a person has no earnings and wants to pay some of their benefits (or other income classed as 'unearned income') into a private pension then it has no effect on UC whatsoever.]

There are limits on payments of unearned income into pension - usually £2,880 (£3,600 gross) per year.

NedS

marcustownsend said:

Hi all. Im on Universal Credit and want to pay into a private pension. 

I’ve tried asking UC how this would work, how I’d declare this and what would be affected and they can’t seem to give me a clear answer.

Any help would be greatly appreciated.

Thanks in advance,

Marcus

It's been an ongoing issue since UC was introduced in 2013 trying to get DWP to acknowledge and deduct private pension contributions.

Are you able to pay extra contributions into your employers workplace pension scheme? If so, these pension contributions are automatically deducted when your earnings are reported to UC by HMRC. I appreciate that not everyone wants to use their workplace scheme and you may prefer a private pension such as a SIPP, but you could always transfer cash out of your workplace scheme and into a private pension (SIPP) once a year or so.

If you are able to use your workplace scheme, this is a far easier route than fighting with UC every month trying to get them to do the right thing. There are many lengthy threads on here about pension contributions and UC describing the process and difficulties people routinely experience.