Small Pots Pension effect on UC

peteuk

Theres a very simple unknown, and that is what capital the Op currently has, or any disregarded amounts (COL ect)

saintscouple said:

My question is, in the same assessment period as when the lump sum hits my account, could i spend the excess of £6k, so my account shows a balance of less than that amount, and then declare it to UC meaning I avoid any deductions? 

Thank you 

saintscouple

peteuk said:

Theres a very simple unknown, and that is what capital the Op currently has, or any disregarded amounts (COL ect)

saintscouple said:

My question is, in the same assessment period as when the lump sum hits my account, could i spend the excess of £6k, so my account shows a balance of less than that amount, and then declare it to UC meaning I avoid any deductions? 

Thank you 

Cheers for picking up on that Pete, I should have mentioned I currently have no savings / capital

HillStreetBlues

NedS said:

HillStreetBlues said:

If your UC payment  (or other benefits & income) is over £1k then even with £7k monies at the end of your AP you aren't over the £6k lower capital limit.
With that amount of money DoC will not be a factor.

They've received £7k of capital in the AP. If they then spend £1k of that capital during the rest of the AP to take it under £6k by the end of the AP, then clearly DoC is relevant. It is income that is not relevant (in this case) as it is not capital. This isn't about income being classed as capital in the AP in which it was received. The £7k was never income, it was always capital from the day it was received.

Why it won't be a factor, is OP states the will have £7k after taking the £7k pension, this means they have no capital and spending income.
When OP gets pension, they can stop spending the income and spend the capital on day to day stuff, rent, petrol shopping etc.
Spending capital first during an AP seems the default by the DWP when calculating  what capital a person has at the end of the AP, so will be very easy to burn up a £1000 of the capital over the AP.
If now under £6k the Op can if they wish declare how much capital they have (not an option if over £6k) so this is unlikely to flag up anything as so little of the capital has been spent.
Now consider the it's the DWP to show it's "significant purpose" of maybe spending a few hundred pounds that wasn't  day-to-day spending, it just not going to happen as it would be nearly impossible to do so up to  a legal standard.
If OP was taking 17k it would be a whole different matter

NedS

HillStreetBlues said:

NedS said:

HillStreetBlues said:

If your UC payment  (or other benefits & income) is over £1k then even with £7k monies at the end of your AP you aren't over the £6k lower capital limit.
With that amount of money DoC will not be a factor.

They've received £7k of capital in the AP. If they then spend £1k of that capital during the rest of the AP to take it under £6k by the end of the AP, then clearly DoC is relevant. It is income that is not relevant (in this case) as it is not capital. This isn't about income being classed as capital in the AP in which it was received. The £7k was never income, it was always capital from the day it was received.

Why it won't be a factor, is OP states the will have £7k after taking the £7k pension, this means they have no capital and spending income.
When OP gets pension, they can stop spending the income and spend the capital on day to day stuff, rent, petrol shopping etc.
Spending capital first during an AP seems the default by the DWP when calculating  what capital a person has at the end of the AP, so will be very easy to burn up a £1000 of the capital over the AP.

So you accept they are spending capital, and if they are spending capital then DoC is relevant (a factor). Granted it is unlikely to be an issue, but that will be for a DM to decide and you cannot simply dismiss it as not relevant (or not a factor in your words).

HillStreetBlues

NedS said:

So you accept they are spending capital, and if they are spending capital then DoC is relevant (a factor). Granted it is unlikely to be an issue, but that will be for a DM to decide and you cannot simply dismiss it as not relevant (or not a factor in your words).

Factor - fact or situation that influences the result of something
I do not think DoC rules will influence or change the result of anything, so not a factor.
It's not for a DM to decide, it's for a DM to prove, there is a big difference.

Newcad

The other thing that @saintscouple doesn't mention is if they will also be taking any regular income from the pension after taking a lump sum?

Any regular income that is taken will of course count as 'Unearned Income' and so will reduce UC £ for £.

(That's why I have deferred commencement of my small workplace pension until I reach State Pension Age, although I would have taken a £6k (or £7k and immediately spent some) lump sum on it's own but that's not possible with my type of pension).

HillStreetBlues

Newcad said:

The other thing that @saintscouple doesn't mention is if they will also be taking any regular income from the pension after taking a lump sum?

Any regular income that is taken will of course count as 'Unearned Income' and so will reduce UC £ for £.

(That's why I have deferred commencement of my small workplace pension until I reach State Pension Age, although I would have taken a £6k (or £7k and immediately spent some) lump sum on it's own but that's not possible with my type of pension).

Good point.

That's the thing if you could chose to take a lump sum, by taking it that must be a plan to spend some of the money otherwise it becomes pointless taking it.

kaMelo

I doubt there will be regular income as the OP mentioned they are drawing a lump sum under the small pots rule. This only applies to DC pension pots of under £10,000.

saintscouple

Yes, I am not taking a regular income from the pension, just this lump sum..
And yes, it is to clear some debts and for a special purchase. However that may not be made in the same AP as receiving the funds.

Spoonie_Turtle

If you have no other capital and then take £7,000 your deduction from UC would be 4x£4.35/month = £17.40 (or if it's slightly above 7k, 5x4.35 = 21.70) so if it came to it and you still had the full amount at the end of the same AP - or if they did later decide DoC came into play - hardly life-changing amounts.  Obviously you don't want them to make a wrong decision, but just in the worst case scenario, it's not going to be a terrible burden.

But paying off debt is never DoC so if your debts are 1k or more and you pay them off first, you should be fine.