The impact of Universal Credit on pensions and savings

I have the option of taking a private pension early and this will release a small lump sum of about £6,200, which I plan to use to clear some mortgage arrears and pay off the balance in full.

This will likely use the bulk of the pension lump sum. The pension will also provide a small monthly income of about £80.

How will, if at all, my proposed course of action affect the Universal Credit claim?

A. As Universal Credit is a means tested benefit, any income and capital you receive must be disclosed to the Department for Work and Pensions (DWP) and will potentially lead to a recalculation of your monthly payment.

Turning firstly to the capital sum, any savings above £6,000 will generate tariff income similar to the rules to the legacy benefits UC replaced.

Every £250 of savings you have above this limit will be deemed to generate weekly income of £1 and your UC will drop by this amount.

UC also has similar rules to legacy benefits concerning deprivation of capital i.e. if the DWP think you have deliberately spent money to increase your UC then you will be treated as still having the money.

Given your particular circumstances in that you have arrears for a mortgage and as this is a priority debt, it is unlikely the DWP will see this as a deliberate deprivation of savings. It is always recommended that you disclose the savings to them as well as your plans.

As for the monthly pension, this will be classed as income and your UC will be reduced on a £1 for £1 basis, as your pension will generate a weekly income of approximately £20/week then your UC will drop by the same amount.

If you receive Council Tax Reduction then the savings from the pension and monthly pension will not reduce the amount you are paid. You should still however disclose this to your local authority.

Q. I was getting the Severe Disability Premium (SDP) as part of my ESA entitlement but when I had my PIP review I lost the care element.

I did not tell the DWP at the time as I appealed the PIP decision and I am waiting for a tribunal date.

ESA did eventually find out and I was overpaid about four months of the SDP.

This is being deducted from my benefit If I am successful at appeal, will any payments I made for the overpayment be paid back?

A. As long as your appeal is successful for your PIP claim and you continue to meet the remaining conditions for the SDP then your overpayment will be revised and any payments you have made will be reimbursed.

If you happened to have received a fixed penalty as part of the overpayment for failing to notify the DWP of a change in circumstances then this, however, will not be refunded as the penalty was applied for failing to adhere to the conditions attached to claiming benefits and not because you no longer met the criteria for the SDP.