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Forum Home  →  Discussion  →  Universal credit administration  →  Thread

Draw Down Pension is this an asset?

Tim Saint
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Benefits Service Coordinator, Swindon Carers Centre

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I think I know the answer to this, but my customer got a big redundancy payment and invested it into a Drawdown Pension Fund, which he can access funds from more or less at will, with the correct notice as he is over 55.

Their household income is below the Applicable Amount for UC as he gets Carers Allowance and his wife gets NSESA Support Group. He did not put the redundancy into a pension fund with any intention of claiming benefits, it is only now that he is a full-time carer that he has limited income.

I suspect the money in the pension fund will be classed as capital, but if it had been an occupational pension scheme that he had payed into over the years, then it wouldn’t.

Any thoughts would be appreciated.

Cheers

Tim

Paul_Treloar_AgeUK
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Information and advice resources - Age UK

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See our factsheet Pension Freedom and benefits

5.2 Capital
If your pension pot remains untouched and you are below State Pension age, its value is ignored as a capital asset. However, if you take a lump sum from your pension pot, as partial drawdown or the whole amount, it is treated as capital in the means-test. This may mean your entitlement is reduced or removed.

So I think the pension pot should be entirely disregarded as things stand - however, I suppose the DWP might try to argue deprivation of capital but it’s difficult for me to see that sticking. He hasn’t actually deprived himself in that he still has the money, it’s simply invested somewhere that has specific criteria as to how and when you can access it. I’m fairly sure there have been discussions on these boards before about whether or not deprivation might be deemed to apply here but don’t have the time to search them down I’m afraid.

Ianb
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Macmillan benefits team, Citizens Advice Bristol

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I don’t think the discussion about moving capital into pension funds and whether or not this is deprivation of capital is a question that needs to be considered.

The key bit is surely

Tim Saint - 08 March 2022 11:51 AM

He did not put the redundancy into a pension fund with any intention of claiming benefits, it is only now that he is a full-time carer that he has limited income.

At the time it was done claiming benefits was not a motivating reason so it shouldn’t be treated as deprivation of capital.

Paul_Treloar_AgeUK
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Information and advice resources - Age UK

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Ianb - 08 March 2022 08:10 PM

I don’t think the discussion about moving capital into pension funds and whether or not this is deprivation of capital is a question that needs to be considered.

The key bit is surely

Tim Saint - 08 March 2022 11:51 AM

He did not put the redundancy into a pension fund with any intention of claiming benefits, it is only now that he is a full-time carer that he has limited income.

At the time it was done claiming benefits was not a motivating reason so it shouldn’t be treated as deprivation of capital.

It shouldn’t be, I agree Ian, but this is DWP and UC we’re talking about here.

Tim Saint
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Benefits Service Coordinator, Swindon Carers Centre

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Thank you for the replies, most useful.

Cheers

Tim

Diogenes
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welfare benefits, citizens advice, sherwood & newark

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Paul_Treloar_AgeUK - 09 March 2022 09:15 AM
Ianb - 08 March 2022 08:10 PM

I don’t think the discussion about moving capital into pension funds and whether or not this is deprivation of capital is a question that needs to be considered.

The key bit is surely

Tim Saint - 08 March 2022 11:51 AM

He did not put the redundancy into a pension fund with any intention of claiming benefits, it is only now that he is a full-time carer that he has limited income.

At the time it was done claiming benefits was not a motivating reason so it shouldn’t be treated as deprivation of capital.

It shouldn’t be, I agree Ian, but this is DWP and UC we’re talking about here.

i seem to recall something about ‘significant operative purpose’ rearing’s it’s head occasionally ,  what was all that about ?

Paul_Treloar_AgeUK
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Diogenes - 09 March 2022 11:55 AM

i seem to recall something about ‘significant operative purpose’ rearing’s it’s head occasionally ,  what was all that about ?

This article from Citizens Advice is very good on this and related issues.

A guide to deprivation of capital/income