LCWRA and private pension — Scope | Disability forum
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LCWRA and private pension

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qwerty1234
qwerty1234 Community member Posts: 2 Listener
in Universal Credit (UC)
Hi, I'm new to the forum. I have a query regarding LCWRA and hope someone can help.
My sister suffers from severe mental health problems and as such receives LCWRA of £390.06 pcm in addition to the UC standard allowance of £368.74. She doesn't get a housing cost element as she lives with family. I understand that because she gets LCWRA she has a work allowance of £631 per month which in theory means she could earn up to that amount before her UC is reduced.
This is what I understand about LCWRA and how earned income is treated. My question relates to how unearned income is treated if you receive LCWRA. She may be entitled to a small private pension (<£500 pcm) as a financial dependent of our late father. However we have been informed that if she were to draw this small private pension it would reduce her Universal credit benefit on a pound for pound basis, in stark contrast to how earned income is treated. 
Is this correct? She is allowed to work a little if she could but is not allowed to draw this small private pension without reducing her benefits?
Thanks for any advice or guidance. 
best wishes
Q
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  • poppy123456
    poppy123456 Community member Posts: 54,700 Disability Gamechanger
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    A pension is treated as unearned income and a weekly/monthly drawn down will reduce her UC £1 for £1. You are correct that earned income is treated differently to unearned income. The same rules applied to the old legacy benefits.

    For this reason it would be pointless to withdraw any income from a pension while claiming UC.
    I would appreciate it if members wouldn't tag me please. I have all notifcations turned off and wouldn't want a member thinking i'm being rude by not replying.
    If i see a question that i know the answer to i will try my best to help.
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  • qwerty1234
    qwerty1234 Community member Posts: 2 Listener
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    Thats very helpful , thanks for the speedy reply! 
    This will only change when she qualifies for state pension, when she would be able to draw a private pension too? Is that correct?
    thanks 
    Q
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  • poppy123456
    poppy123456 Community member Posts: 54,700 Disability Gamechanger
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    When she reaches state pension age if she's a single person then her UC will end anyway.
    I would appreciate it if members wouldn't tag me please. I have all notifcations turned off and wouldn't want a member thinking i'm being rude by not replying.
    If i see a question that i know the answer to i will try my best to help.
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