Universal Credit Review & Pension Pot

Mary284

Hello, I have just been contacted by Universal Credit for a review, they said to check I'm on the correct amount of Universal Credit. They called today & asked for last 4 months bank statements & photo ID. Is this routine as has me worrying?

Over last year I've had a lot of health issues, Ive applied for PIP, but not updated journal. I'm also in LCW category, Should I update journal now?

Also, in Sept last year, I transfered a work pension to a personal pension. I've made 3 withdrawals, 1st tax free £5k, 2nd £4.6k (after tax) in Nov 23 & 3rd £4.4K (after tax) in Mar 24. I haven't reported this, should I do that now? Also, will the lump sums be classed as "Savings* so as long as under £6K am OK? Is it possible they'll view it as "Income" (unearned) as unfortunately on the statement, they are titled "regular payment" even though they are not, they are ad hoc. What would position be if classed as Income, is it still OK if under £6K? Also do they take into account remaining pension pot which is a mix of TDs & cash or is it only the withdrawals they are interested in?

Ive also opened a new account, Chase, as interest good & have a Halifax account which I can't remember if I disclosed or not when I started my claim. Plus an NS&I account. Is there any way to check what I have already told them? And, should I update journal to include these & pension? As long as they only count pension withdrawals (and not the whole pot), I should be within £6K limit.

I'm worried sick about all this, mainly for not updating journal... and the pension transfer Are the strict about this (not updating journal) will they understand that's its been due to ill health....

I'd be so grateful for any advice on the above. Thank you!!

Mary284

By TDs, I mean Term Deposits 🙂

poppy123456

The pension drawdowns are treated as capital (savings) and not income. When you withdrew those amounts, you should have reported the changes because all changes need to be reported. I'm surprised they didn't contact you when you withdrew those amounts because they would have received information about those.

Capital of less than £6,000 is ignored but everything you have in every single bank account, savings account, at home, apart from in a pension pot is counted towards the capital.

If you make regular withdrawals from a pension pot then it could be treated as income, especially if the gap between each withdrawal is short.

You do not need to report opening a new bank account.

This review is normal because they are reviewing millions of people. All I can advise is that you be honest.

JonnycJonny

During the telephone appointment they will ask you questions regarding savings accounts, ISAs, money from property, PayPal accounts and a number of other financial products. You will have to answer Yes or No to the questions and then possibly submit further statements depending on your answers.

When you first applied for UC you would have been asked about all your savings, pensions etc - if things have changed since then I am afraid the onus was on you to update the DWP.

If you have any funds ( in whatever form ) over the £6000 threshold by the end of an assessment period then the amount over £6000 and up to £16000 will be treated as capital - even if it represents unspent benefit payments. You report this amount on your Journal in the subsequent assessment period and the relevant deductions will then be made to your monthly UC entitlement until the savings/capital have dropped below the permitted level.

Seek professional advice if you feel you may have fallen foul of the rules. Better to be honest.

As to your specific questions on your TDs others here will no doubt chip in.

Don't worry - it can be sorted out.

Best wishes

JonnycJonny

By funds above, I mean money in your current / savings accounts ( not in a pension pot ) - unless you are withdrawing money from your pot into your accounts - which I see Poppy has already talked about.

Mary284

Thanks very much Poppy & Jonny.

I'm aware now I should have reported these pension withdrawals at the time, but have been unwell, had operation etc, so just didn't think.... I also did think that unless savings went over £6k, you didn't need to. Do you think I should report now (I've made 3 withdrawals, 1st tax free £5k in Sept 23, 2nd £4.6k (after tax) in Nov 23 & 3rd £4.4K (after tax) in Mar 24). 

Also, Poppy, you mentioned that withdrawals could be treated as income, depending on gap between them and if it is short. Based on my 3 withdrawals, do you feel they will be regarded as capital or income?

Lastly, I'm a bit confused. Poppy, you say you don't have to report opening a new bank account, yet you do need to tell them about all savings? So, do I need to tell them of new accounts even if I'm just moving money around to get better interest?

I will, of course, be honest, Johnny, you mention getting professional advice? Should I do that now or wait for an outcome? Currently I've only been asked for 4 months of bank statements?

Will they come down hard on me for not reporting everything? I'm worried sick. Should I report everything now? As they've given me 14 days to send ID & statements.Thanks again...

Mary284

I'm wondering. Do you need to inform DWP of all accounts you have, even if between them all it is less than 6K? Just thinking about Poppys comment, saying you don't have to report opening of new bank account. Just trying to be clear. Say for example, I open new account as interest better, but only moving money between this and my main account where benefits paid, do I tell them about this?

Is it only if you go over the £6K limit, that you need to report it?

Am so worried, but hoping once I'm clear as to what's required, I can get everything sorted out and up to date with them.

Thanks again

poppy123456

You do not need to report all bank accounts. You only need to report if you have capital of more than £6,000 in all of your accounts, as well as any money you have at home.

The reason you should have reported the pension drawdown is because you withdrew from a pension pot, which always needs to be reported.

I can't tell you if those withdrawals will be too close and be treated as income, that will be for a decision maker to decide.

JonnycJonny

During the telephone appointment they will ask you whether you hold other bank accounts - that is, besides the main current account details you will have already provided. It is within the rights as you are claiming a means tested benefit.

Just be upfront and answer truthfully - and send any statements promptly. They will give you a link to upload more statements after the call in your Journal. In my case I had to upload four months' worth of PayPal statements.

poppy123456

To be clear, if they ask you about other bank accounts then yes you need to tell them about all of them. Otherwise, you don't need to "report" them providing your Total capital is less than £6,000.

JonnycJonny

Even though I had far from in excess of £6000 in my PayPal account - they wouldn't just take my word for it. Evidence must be provided - if asked for.

The actual call is pretty straightforward and they might also ask you about one or two outgoing payments - they do not care what goods / services you might have bought ( it is literally none of their business ) - again the question is more about confirming your identity - checking they are actually speaking to the account holder. Have a copy of your statements in front of you just in case.

Best wishes

Mary284

@poppy123456 and @JonnycJonny . Thanks so much. Your info is really helpful. I do really want to get this sorted out.

As there is no requirement to "report" bank accounts/savings unless over 6k, rather than update journal with all accounts, I'm going to go through all and check I'm under the 6k for each assessment period. Then just send what they've asked for currently (4 months bank statements & ID). Then when get call, have statements to hand, answer questions & go from there. Do you think this is best approach?

And, do, they look at all transactions when you send 4 months of statements, or just start & end balances? I'm not trying to hide anything, just want to prepare myself on questions on what I bought..

As for the pension withdrawals, on the 4 months bank statements that I'll be sending, it shows a tax refund from HMRC for tax paid on the taxable withdrawals of around £2500. I don't think this pushed me over 6k limit, but as I should have reported these, do you think its best to update journal now with pension withdrawals?

Or, is it best to wait for call & deal with it then (as guessing they will ask if I have a pension) as this will give me opportunity to explain that these are one off payments & not regular as in set amounts per month? The health issued Ie had and, of course to apologise for not reporting sooner.

Of course, I do want these pension payment to be classed as savings rather than income obviously. And Poppy, you did say originally that the pension drawdowns are treated as capital (savings) and not income. But later said, you can't be sure if my withdrawals are too close and therefore could be treated as income. Is there anyway I can find out? Is it a grey area?. I do have paperwork saying I chose a flexible drawdown (as opposed to a regular Payment or annuity), when I set up my pension, so hopefully with this & fact only 3 withdrawals of different amounts over last year, and that almost all left in pension pot is in term deposits (TDs) - it will be treated for it is, which is one off lump sum payments and therefore savings. I can also show that I needed this money to buy furniture (do I say this?) & that 2 term deposits that have matured, I've reinvested in more term deposits as this pension is for retirement, and I don't intend making any further withdrawals. Do you have any thoughts on this? It's a key thing, as if they class this as income, and £ for £ deducted, that's my UC cancelled and I will have to pay back (get a fine/taken to court even?) and I just can't afford that, and is this that's worrying me most. In this, worse case scenario, would I be able to reapply for UC if say make commitment not to take any more payments?

Can I also be clear, that it's the pension payments the look at and not pension pot remaining?

Lastly, is there anyway I can see what I originally listed under savings when I made my claim?

I'm so worried, can hardly sleep. It's so traumatic and wish I'd just reported things earlier. Do you have any idea how they will handle it, will they fine me? Or, will they be OK as long as apologise & give them all info as asked?

Thanks again, it's a huge help being able to ask on this forum & your replies do help enormously. I'm just hoping that this is not worse case they've ever seen and hopefully this can get sorted & know I'll never mot report again!

JonnycJonny

Their concern is whether your savings / capital have breached the threshold at any time over the past four months. If you have failed for whatever reason to let them know when your capital in any assessment period has breached the threshold then I believe overpayments can be reclaimed from your UC entitlement. Remember it is not a 6k limit - your UC claim is simply reduced by a fixed sum for every £250 over £6000 up to £16000 whereupon your entitlement to UC stops.

Please do not worry - just be honest and provide whatever they ask for. They may not even need anything from you.

It is not a witch-hunt - they want to make sure you are receiving the right amount of Universal Credit -that's all.

Do seek professional advice if you continue to have concerns. Citizens Advice are of great help in these matters.

Best wishes

Mary284

Hi @JonnycJonny thank you so much. A couple of last questions How do they calculate your savings for each assessment period? Because, say my current acceptance fluctuates with bills etc. Do they look at balances on last day of assessment period?

Does my UC benefit count as savings?

As my pension withdrawals don't show in the 4 months statements, butthe HMRC does, would you report these now or wait gor phone call?

Thanks again

JonnycJonny

JonnycJonny

Please read all of the following page from Gov.UK it explains everything for you. Do not worry.

Best wishes

https://www.gov.uk/guidance/universal-credit-money-savings-and-investments#:~:text=If%20you%20have%20money%2C%20savings,not%20a%20complete%20%C2%A3250.

Mary284

@JonnycJonny

Thank you very much, I know I'm spiralling is just the unknown that worries me.

I don't think will be over 6k, maybe in the odd month, but happy to repay any amounts owed as certain not been over £16.

The issue re pensions being taken on ad hoc basis, is definately a grey one when depterming if classed as savings or income. It seems that regular means set amounts on say a monthly basis, but is not clear. As someone said, you can £1 million in pot & get UC. Ie is unclear when a number of withdraws cease to be ad hoc to become and regular and therefore be classed as savings or income?

It's crucial as you can't seem to find out the rule till you actually do it, report it then await a decision. Doesn't seem fair especially as difference between classing these payment as either savings or income has very different impacts ie if income, you could loose your benefit....I'm obviously hoping mine will be classed as savings, but if classed as income and therefore £ for £ taken off benefit (do they look at that period only or split amount depending on how often you withdraw ie. You take £7 pension withdrawal x 3 times over a year, do they split this amount by no of months between withdrawals or just for that assessment period) and if that £ for £ amount is more than benefit, does this mean your claim gets closed, or remain open until income put in savings/spent?

Thanks again,

JonnycJonny

Any type of capital - that is, whatever money, savings, investments you have over £6000 at the end of an assessment period should be reported in your Journal - change of circumstances - during the following assessment period. It is that straightforward. Deductions will then be made from your UC claim for each £250 you have up to £16000.

Do not over think this regarding your pension draw downs. Just keep reporting the excess you have over £6000.

Hopefully the Gov.UK site helped to clarify all this with its examples.

Overpayments will be taken back from your UC.

The telephone call is a formality - don't fret.

I cannot help any further. Seek professional advice if you continue to have anxiety / worries. As I said previously Citizens Advice are excellent in this area

Best wishes

Mary284

Thank you