Pension lump sum and benefits

Altior

Another interesting aspect is the distinction between income and capital if you're not on means tested benefits.

I don't have an 'AP' either.

Currently I just have money, I get income from the DWP every 2 weeks, interest distribution, gambling, dividends, maturing savings and bonus hunting. For me there is no distinction between income and capital, simply the all the funds I have access to go up and down. I pay out hundreds of pounds a month on unsecured credit, priority debts, health costs (private gp), pension etc.

I have not faced any formal declaration of capital, and I'm not short of money (yet).

At what point am I expected to know what capital and income is, and what an assessment period is, what a disregard is, when income becomes capital, what is DoC et al, as defined by the law/DWP? I feel it's fair to say, only when I make an application for means tested benefits. Of course the reality is that I've made it my business to investigate it all, but that's not a requirement (afaik).

TimeLord1

If someone has a pattern of behavior—contributing £100 a month for years—and they continue that while on benefits, it is almost impossible for a Decision Maker (DM) to argue that the motive has suddenly shifted to benefit fraud. It is simply "business as usual" financial planning.

Regulation 50 of the UC Regulations 2013 provides some protection:

​"A person is not to be deprived of capital [if] the person... uses it to reduce or pay a debt... or purchases goods or services where the expenditure was reasonable."

While "pension contribution" isn't explicitly listed as "reasonable expenditure" in the same way a gas bill is, the DWP's own Advice for Decision Making (ADM) generally concedes that contributing to a pension is a legitimate financial activity, provided it doesn't look like "smuggling" assets. If that was a pattern of behavior prior to claiming.

Yamor

https://forums.moneysavingexpert.com/discussion/comment/81914702#Comment_81914702

I agree that it wouldn't be possible for pension contributions to be income deprivation.

It is commonly said that there can only potentially be capital deprivation if the pension contribution (or other potential deprivation) is made from capital and not income, but I'm not sure that this is settled. The Sweet & Maxwell commentary says only that "[it] is arguable that someone cannot deprive themselves of something which they have never possessed", and that would presumably also be the case for something which you do already possess but which is not yet capital.

But I do accept though that even if it could be capital deprivation, it would still be highly unusual for a payment out of income to be deprivation of capital.

Regarding the argument about deprivation only being in a case where you no longer have the asset available, unfortunately (as you mention) there is clear case law that that could be deprivation, and that it is irrelevant that you still have the asset in some different form (R(SB) 38/85 & R(SB) 40/85).

Altior

Something that is difficult for me to contextualise is that there must be 10s of thousands of people (at least) who contribute to a sipp, who are on UC, and not working, but aged 55-74. It's a literal no brainer, if you do it this month with £100, next month it will be £125. I find it hard to believe that it's not been bottomed out already. It's either that, or never been challenged at tribunal level.

Yamor

https://forums.moneysavingexpert.com/discussion/comment/81917443#Comment_81917443

I think at those sort of levels, DWP would have never argued capital deprivation.

Altior

The key element for me was the lump sum withdrawals.

I think I will play this ultra cautiously and put my regular contributions on hold after this tax year until I have successfully applied for UC and my capital balance is more defined and easily identifiable. I am always attracted to pushing the envelope, but really a period of pragmatism is in order. I even closed the regular saver today that means the closing balance earns 1.15% now instead of 7% upon maturity! I was only halfway through the term, so it only cost me thirty odd quid interest on the balance to date. A minor sacrifice in the bigger picture.