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Thread: Contribution to personal pension

  1. #1
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    Contribution to personal pension

    Good afternoon,

    Is contributing to own personal pension depreviation of capital? Wanted to ask before continued to look into doing so before hand so not breaking the rules.

    Thanks

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    Senior Member nukecad's Avatar
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    Which benefit are you claiming? (or intending to claim soon).

    Is your savings/capital above £6,000, if so is it above £16,000?

    Will you be contributing to the pension from that savings/capital or from income?

    Will you be contributing over time, or buying a pension with a lump sum?
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    Thanks Nukecad

    Would be for UC just exploring options at moment, if my ESA stops and not sure how to get capital down; as no rent etc. I pay parents toward food etc with my PIP.

    My ESA claim has been "escalated" am unsure what they mean here, unless they mean will be in Support Group till get something done about an assessment, so least will not have anything escept my PIP; a F2F is a deifinintve requirement for me as Phone not appropriate, being severely deaf; am unable to hear my father over headphones for example, did not even hear ambulance come without them or the noise of ambulance/noise the crew made to get Mum to hospital

    Capital is just over £16, just can see only way to take down is to put in to a pension was really unsure if they would be concerned if I put £4000 from savings in one go to pension or would it be better do contributions over time? I have seen a flat that I would like but too much £11,000 lot for a deposit in one go but being out of work would be unrealistic to get a Mortgage, but then with enhanced PIP ongoing both may have good chance, but just anything realistic from UC seems to be £3000 or more less in capital and quite big drop and trying to tread carefully and asking best way to proceed before did anything so not caught out etc.

    If can do this, and UC proceeds, how would this pan out? My Fit Note is till 1 June? I assume when told nine months of arrears owed to me come when my contributions expire and not before? If have to do UC before, can I use same fit note?

    Thanks
    Last edited by anonymous; 21-04-21 at 13:34.

  4. #4
    Senior Member nukecad's Avatar
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    Whew, time for a longish answer, hope that you can follow it.

    I get from your reply that:
    You have already made a claim for ESA, but haven't been able to have an assessment (yet) because of your deafness.
    You are considering what would happen if you also claimed UC.
    You have just over £16,000 in savings/capital.
    You live with your parents.

    To start with all new claims for ESA are Contributions Based so are not affected by any savings/capital.
    As long as you are awarded Support Group that will continue to be the case.
    If you are awarded WRAG group then the ESA will only last for 12 months (365 days) from when you first claimed it.
    If you are found fit-for-work then the ESA will stop when that decision is made.

    UC is affected by capital/savings so with over £16K you do not qualify for UC, as you already know.
    So you are wondering how to get savings down to be able to claim UC without falling foul of deprivation rules.

    The rules on depravation are different in UC than they are for legacy benefits.
    (eg. In UC you can 'reasonably' use capital to fully pay off a debt, say a credit card. In legacy benefits you can only make the minimum payment each month).

    For UC: "The law says people are treated as having capital they do not have if they deprive themselves of capital to get UC or more UC. The capital people are treated as having is called notional capital." (ADM H1795, see below).

    So it's not just spending the money, it doing it with the intention of getting (more) UC that counts.
    If you didn't know it would change your entitlement to UC then it can't be deprivation. (ADM H1840, see below).
    TBH you do know that, and that is your intention here, but the DWP Decision Maker also has to reasonably show that was your intention. (ADM H1841, see below).

    It's the DWP Decision Maker who decides if any spending classess as deprivation or not, guided for UC by the 'Advice for Decision Makers', Chapter H1: Capital.
    https://assets.publishing.service.go...0315/admh1.pdf

    H1020 sets out what is regarded as capital.
    Part 3 includes 'Personal Pension Schemes' as capital, but that is then modified by Chapter H2, para H2046, which says that funds in occupational and personal pensions are disregarded as Capital.
    https://assets.publishing.service.go...2331/admh2.pdf
    H2046 The value of any right to receive a pension under
    1. an occupational or personal pension scheme or
    2. any other registered pension scheme
    is disregarded indefinitely.
    So funds in a pension are capital, but disregarded as capital for UC purposes.

    To get back to Chapter H1:
    'Deprivation of Capital' starts at paragraph H1795.

    H1796 part 2 says that you have not deprived yourself is the spending was "reasonable in the circumstances of that persons case".

    H1842/1843 are also interesting.
    That says that it is not deprivation if you have told the DWP what you intend to spend the money on, and they agree that it wouldn't count as deprivation.
    Of course contacting the DWP in that way shows that you do intend to claim UC, and that you do know about the deprivation rules.

    The ADM then goes on to consider the date of any deprivation, etc. and then say how 'Notional Capital' (what you would have if you hadn't spent it) is calculated and applied, etc.

    Private Pensions:
    H1796 also refers to ADM memo 13/15 which is about 'Pension Flexibilities'.
    I'm having trouble finding a copy of that memo, it is no longer included with all the other ADM guidance and memos. (That's usually because it's been incorporated where needed into the main guidance and not yet removed from where it isn't needed anymore).
    However I expect that it will be about drawing down from a private pension before you reach State Pension Age, rather than setting one up.
    (The law/rules on drawing down changed in 2015 which is about right for that memo).

    My conclusion:

    Overall after re-reading the ADM I'd say that if you bought a private pension using a lump sum of your savings, shortly before you made a claim for UC, then that would be regarded as 'depriving yourself of capital in order to get UC' and you would be classed as still having that money (Notional Capital).

    If you pay a lump sum into a pension pot and you don't intend to claim UC then it's none of the DWP's business.
    If six months to a year down the line you claim UC then it could be reasonable to argue that you didn't know you would be later claiming UC when buying the pension.
    It would then be up to the Decision Maker to decide if that is reasonable or not.

    If rather than a lump sum you set up regular payments into a pension fund so that your capital slowly diminishes over time then that will also probably be OK as long as you don't do it too soon before claiming UC.

    And just for completeness, anything spent on buying your own place to live in would not be classed as deprivation.

    On a side note:
    When thinking about this it's a bit of a funny situation from a legal standpoint; (unless I'm missing something which is always possible).
    Because H1020 says funds in a pension scheme are still capital, it may look at first that you haven't deprived yourself of any capital by buying a pension. (H1020 says it's still capital so you still have the same capital, it's just some of it is now disregarded for UC purposes).
    You have however deprived yourself of access to that capital, which the DWP see as being the same thing (rightly or wrongly) and why H2046 makes it a disregard.
    Last edited by nukecad; 22-04-21 at 12:47.
    I don't know everything. - But I'm good at searching for, and finding, stuff.

    Migration from ESA to Universal Credit- Click here for information.

  5. #5
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    Quote Originally Posted by nukecad View Post
    Whew, time for a longish answer, hope that you can follow it.

    I get from your reply that:
    You have already made a claim for ESA, but haven't been able to have an assessment (yet) because of your deafness.
    You are considering what would happen if you also claimed UC.
    You have just over £16,000 in savings/capital.
    You live with your parents.

    To start with all new claims for ESA are Contributions Based so are not affected by any savings/capital.
    As long as you are awarded Support Group that will continue to be the case.
    If you are awarded WRAG group then the ESA will only last for 12 months (365 days) from when you first claimed it.
    If you are found fit-for-work then the ESA will stop when that decision is made.

    UC is affected by capital/savings so with over £16K you do not qualify for UC, as you already know.
    So you are wondering how to get savings down to be able to claim UC without falling foul of deprivation rules.

    The rules on depravation are different in UC than they are for legacy benefits.
    (eg. In UC you can 'reasonably' use capital to fully pay off a debt, say a credit card. In legacy benefits you can only make the minimum payment each month).

    For UC: "The law says people are treated as having capital they do not have if they deprive themselves of capital to get UC or more UC. The capital people are treated as having is called notional capital." (ADM H1795, see below).

    So it's not just spending the money, it doing it with the intention of getting (more) UC that counts.
    If you didn't know it would change your entitlement to UC then it can't be deprivation. (ADM H1840, see below).
    TBH you do know that, and that is your intention here, but the DWP Decision Maker also has to reasonably show that was your intention. (ADM H1841, see below).

    It's the DWP Decision Maker who decides if any spending classess as deprivation or not, guided for UC by the 'Advice for Decision Makers', Chapter H1: Capital.
    https://assets.publishing.service.go...0315/admh1.pdf

    H1020 sets out what is regarded as capital.
    Part 3 includes 'Personal Pension Schemes' as capital, but that is then modified by Chapter H2, para H2046, which says that funds in occupational and personal pensions are disregarded as Capital.
    https://assets.publishing.service.go...2331/admh2.pdf
    So funds in a pension are capital, but disregarded as capital for UC purposes.

    To get back to Chapter H1:
    'Deprivation of Capital' starts at paragraph H1795.

    H1796 part 2 says that you have not deprived yourself is the spending was "reasonable in the circumstances of that persons case".

    H1842/1843 are also interesting.
    That says that it is not deprivation if you have told the DWP what you intend to spend the money on, and they agree that it wouldn't count as deprivation.
    Of course contacting the DWP in that way shows that you do intend to claim UC, and that you do know about the deprivation rules.

    The ADM then goes on to consider the date of any deprivation, etc. and then say how 'Notional Capital' (what you would have if you hadn't spent it) is calculated and applied, etc.

    Private Pensions:
    H1796 also refers to ADM memo 13/15 which is about 'Pension Flexibilities'.
    I'm having trouble finding a copy of that memo, it is no longer included with all the other ADM guidance and memos. (That's usually because it's been incorporated where needed into the main guidance and not yet removed from where it isn't needed anymore).
    However I expect that it will be about drawing down from a private pension before you reach State Pension Age, rather than setting one up.
    (The law/rules on drawing down changed in 2015 which is about right for that memo).

    My conclusion:

    Overall after re-reading the ADM I'd say that if you bought a private pension using a lump sum of your savings, shortly before you made a claim for UC, then that would be regarded as 'depriving yourself of capital in order to get UC' and you would be classed as still having that money (Notional Capital).

    If you pay a lump sum into a pension pot and you don't intend to claim UC then it's none of the DWP's business.
    If six months to a year down the line you claim UC then it could be reasonable to argue that you didn't know you would be later claiming UC when buying the pension.
    It would then be up to the Decision Maker to decide if that is reasonable or not.

    If rather than a lump sum you set up regular payments into a pension fund so that your capital slowly diminishes over time then that will also probably be OK as long as you don't do it too soon before claiming UC.

    And just for completeness, anything spent on buying your own place to live in would not be classed as deprivation.

    On a side note:
    When thinking about this it's a bit of a funny situation from a legal standpoint; (unless I'm missing something which is always possible).
    Because H1020 says funds in a pension scheme are still capital, it may look at first that you haven't deprived yourself of any capital by buying a pension. (H1020 says it's still capital so you still have the same capital, it's just some of it is now disregarded for UC purposes).
    You have however deprived yourself of access to that capital, which the DWP see as being the same thing (rightly or wrongly) and why H2046 makes it a disregard.
    Ok thank you I have not taken any action just thought see what options there were.

    I have no outstanding debt etc.

    I hope they've put me in the Support Group temporarility so get something till can get an assessment done. I thought be sure what to do as a four figure sum in one go would be a lot and didn't want to break any rules before doing anything and thought best to ask.

    Really hope something is sorted soon; given Descriptor 7A is the likely conclusion for me; in my examples given for it - cannot even hear my father 37 feet away as well.

    Let's see what happens come June; but hope something will be done soon.

  6. #6
    Senior Member nukecad's Avatar
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    Quote Originally Posted by anonymous View Post
    I hope they've put me in the Support Group temporarility so get something till can get an assessment done.
    Are you not being paid assessmet rate ESA, or has that run out after 365 days without assessment?
    (That's happened to a couple of others who have posted here?.
    I don't know everything. - But I'm good at searching for, and finding, stuff.

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    Quote Originally Posted by nukecad View Post
    Are you not being paid assessmet rate ESA, or has that run out after 365 days without assessment?
    (That's happened to a couple of others who have posted here?.
    I have till 20 June so still bit of time, but was just taking caution to know what this all means before do anything; they've advised it's been escalated; but am unsure what they mean; unless they've put it on standby to go Support Group from 20 June and not before, told "was sorry for sleepless nights, covids changed everything, have nine months of arrears owed to me" was not clear enough and was on 24 March when they told me this so I guess I think ring to find out when the arrears is expected or take assumption with Debt Management for now given the backlogs; didn't expect so much like that on that their end; but was nice conversation; had been asked if I included an audiogram with my ESA50 form and I said yes. Just frustration not hearing ambulance without them especially as they are normally very noisy.

  8. #8
    Senior Member nukecad's Avatar
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    Escalation means that they have dug your file out and moved it to someone to take action instead of leaving it in the big queue.

    As you can not do a telephone assessment that probably means a paperwork assessment.

    Of course that can only support your hearing issues.
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    OK will see what happens, but thank you thought best thing to see how to proceed before took any action.

    I am just very worried about the assessment, I get sciatic nerve damage too from two injuries; obviously I have reported change of circumstances to IIDB; I went to lift loaf of bread and was hardly able to walk; so it's very hard to predict when the pins and needles occur so you can imagine any employer will not take the chance of hiring for constant rest breaks. Would it be easier do you think to describe my circumstances round my back injury; at face to face for IIDB as I had letter from my shop keeper who witnessed me lift the loaf of bread pick up; I guess I should be greatful he did a support letter; but I guess his opinion won't be taken in to consideration? I have not however been able to obtain work as a key worker/shop worker during Covid; should I say that just unsure how to tread waters on the injury front. I had a slipped disc; two work injuries; barrister said had good prospects for second but could not continue because firm were caught by the SRA and forced to close. I got IIDB for the first accident, but given my pains worsened in 2021 they want to see me for second accident, as first was more manual handling related as didn't get appropriate training before hand, but got compensation for first accident.

    Second question is I guess makes sense from what you've said; I guess general rule is if they have done descriptor 7A paper based; I won't get anything for this until after 20 June not before? I realise it is not means tested and things but from my Capital do I deduct what had from ESA in the last year in my Capital, does that make sense or do I not include it? I am just unsure if I should be deducting what Capital is minus the ESA had June 2020 to June 2021 or including it to see if still over threshold in Capital.
    Last edited by anonymous; 23-04-21 at 13:03.

  10. #10
    Senior Member nukecad's Avatar
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    I'd have sent the DWP a copy of that letter you used for IIDB anyway, maybe still send it, it's all evidence.
    Even if the DWP chose to ignor it they can't later say they didn't know.

    Income from benefits is income and not capital - unless you don't spend it that fortnight/month so that it then becomes savings.

    It's usually best to have two accounts, one for savings and one for living expenses.
    That way it's clearer which is which.

    If you are found LCWRA (Support Group) then your ESA goes up from the date of that decision, and the SG component will be backpaid to the start of the 14th week of the ESA claim.

    Benefit arrears paid as a lump sum are not counted as capital for 52 weeks after receiving them. (And in some cases for the liftime of your benefits claim).
    If you ever get a realy big sum of arrears then if you are on an IR benefit it's best to put that backpay in a seperate account again, so that it's easy to see that it's disregarded capital.
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