Old pension lump sum affect UC

Bigholmesy

Hi all
I have recently been contacted by a company I worked for about 30years ago,  telling me I have a pension of about 10k and outlining some options.
If I took the whole 10k to do much needed work in the house, do I need to inform UC and would it affect my entitlement and how?
Clueless as to how this works so thank you for any info or advice.

huckster

Yes you have to report change under money, savings and investments via the report a change option on your claims homepage. And as the money reduces report same change at end of each UC assessment period.

UC will apply deduction of £4.35 to UC statements for each £250 above £6000.

If total money, savings and investments exceeds £16000 your claim will be closed. In this situation you can ask about disregards, if any home repairs are to remove risks or add improvements to help disabled person live in house etc.

Bigholmesy

So does that mean if I take the 10k that they will deduct £4.35 for each £250 on over 6k meaning 4k over that would equate to 16x£250. 16x£4.35= £69.60 from my statement for that 2 assessment period?

Have I got that right ?

Silvertabby

Is this old pension a DB?  If so, is this your only pension, apart from the State pension?  If not, then you may only be able to take it as a one-off lump sum if the amount payable is LESS  than £10K.  £10K or more, and different rules apply - ie, you may only take this as a commuted lump sum if the total value of all your pensions (excluding the State) is less than £30K.

ADD.  Again, if this little pension is a DB......Just had a look at your other posts, and you do indeed have other pensions.  This means that the <£10K triviality/small pot rules don't apply to you so, if your 'about £10K' is really £10K or over, then you will be limited to the other options offered - a smaller lump sum and an annual pension.

Bigholmesy

Silvertabby said:

Is this old pension a DB?  If so, is this your only pension, apart from the State pension?  If not, then you may only be able to take it as a one-off lump sum if the amount payable is LESS  than £10K.  £10K or more, and different rules apply - ie, you may only take this as a commuted lump sum if the total value of all your pensions (excluding the State) is less than £30K.

ADD.  Again, if this little pension is a DB......Just had a look at your other posts, and you do indeed have other pensions.  This means that the <£10K triviality/small pot rules don't apply to you so, if your 'about £10K' is really £10K or over, then you will be limited to the other options offered - a smaller lump sum and an annual pension.

Yes I have other pension with the company I work with and well over the 30k in it.

Yes this is a DB pension. Is it just over £12k but the offer of payment with 25% tax-free and the rest taxed amounts to just over the 10k mark to cash it in orthere was also an option to take 25% tax-free and leave the rest.

Either way if I take any of it it would all go towards doing work on the house. I just concerned on if I decide to take 25% approx £2.8 k or all of it what implications it may have on my entitlement/statemens

p00hsticks

Bigholmesy said:

Silvertabby said:

Is this old pension a DB?  If so, is this your only pension, apart from the State pension?  If not, then you may only be able to take it as a one-off lump sum if the amount payable is LESS  than £10K.  £10K or more, and different rules apply - ie, you may only take this as a commuted lump sum if the total value of all your pensions (excluding the State) is less than £30K.

ADD.  Again, if this little pension is a DB......Just had a look at your other posts, and you do indeed have other pensions.  This means that the <£10K triviality/small pot rules don't apply to you so, if your 'about £10K' is really £10K or over, then you will be limited to the other options offered - a smaller lump sum and an annual pension.

Yes this is a DB pension. Is it just over £12k but the offer of payment with 25% tax-free and the rest taxed amounts to just over the 10k mark to cash it in orthere was also an option to take 25% tax-free and leave the rest.

That doesn;t sound like a DB pension to me - with a DB pension you may get an offer of a tax free PCLS (Pension Commencement Lump Sum) but then you'd also start getting a regular payment (usually monthly). If you're being offer 25% of a pot of money and can leave the rest untouched then that's a DC pension to me.

Bigholmesy

Sorry just read through it again. Yes it is defo DB. The option where to lift it all as lump sum payment, leave it or take 25% tax free and start taking a monthly reduced pension.

As stated before my concern is if I take the lump sum £10.4k after tax or the 25% £2.8k and small monthly pension of approx £35. What impact either of these will have on my entitlement/statemens

Silvertabby

Bigholmesy said:

Sorry just read through it again. Yes it is defo DB. The option where to lift it all as lump sum payment, leave it or take 25% tax free and start taking a monthly reduced pension.

As stated before my concern is if I take the lump sum £10.4k after tax or the 25% £2.8k and small monthly pension of approx £35. What impact either of these will have on my entitlement/statemens

Can't help with the benefits question, I'm afraid, but the small pot/ trivial commutation £10K limit is BEFORE the tax free 25% and tax, so you are well over the limit.

So, your benefits questions need to be linked to the 25% tax free lump sum and monthly income pension.

Spoonie_Turtle

Any monthly amount will be deducted in full from your UC, so it won't actually increase your overall income.

As above, a lump sum would lead to a proportional deduction if it takes your capital above £6,000.

Bigholmesy

Thank you for the help much appreciated 👍

huckster

Bigholmesy said:

So does that mean if I take the 10k that they will deduct £4.35 for each £250 on over 6k meaning 4k over that would equate to 16x£250. 16x£4.35= £69.60 from my statement for that 2 assessment period?

Have I got that right ?

Yes correct