Taking 25% of my pension

Mrevertonone

Hi Guys,

A question for the future, next year in February i can take 25% of my pension (not a huge amount) Question is, if i took it could i use that money to pay off a cruise we have booked for later in that year and one in 2026, Would that be classed as deprivation of assets ? if it is no point taking the 25%

Thank you in advance

Sean

Albus_Scope

Heya @Mrevertonone paying off any debts doesn't count as deprivation of assets, so you'd be ok there. 😊 Where you going on the cruise? I'm now excited for you. 😆

Mrevertonone

So booking a cruise and having a balance to pay is classed as a debt? Thats good to know

We are off to Northern Europe next year and Norway in 2026 :o)

Albus_Scope

Norway, oh lovely, colour me jealous! ❤️

poppy123456

As it's UC you're claiming then you will need to report the changes if you withdraw a lump sum from your pension. If this takes your total capital to less than £6,000 then it will be ignored. If it takes it to more than £6,000 then there's a £4.35/month deduction for every £250 or part thereof over this amount.

I must admit I'm not convinced that paying off a holiday will be counted as a debt, isn't that more of a luxury?

Mrevertonone

Hey Poppy,

I didnt think it would class as a debt, but then how would i pay for my holiday if i didnt use the money i got from my pension or any money from UC ? i suppose the only way of finding out for 100% is to ask UC but they are about as much help as a ice cube in a hot cup of coffee, or the simple way is to carry on as we are paying a little bit off each month with the money we have left over.

Regards

Sean

Albus_Scope

If you have already booked the holiday, it'd class as debt, but if you were to book an over the top, expensive holiday in the future, they may well see that as deprivation of capital.

It's a bit of a grey area and up to the local authority to judge if it is or isn't. Holidays are fine usually, but it all depends on how extravagant they are.

Mrevertonone

Hi Albus

We have 2 or 3 holidays booked over the next 6-18 months all with a very small deposit on, the holidays are expensive between £1000-£1400 each, i just thought if i take 25% of my pension it would clear the balance on them all, i dont want it to sound like we have money to throw away because we dont, i work full time, partner is diasbled we dont drink we dont smoke we dont drive we dont go out, so what little money we have left we save to pay for holidays, i hope that dont sound wrong, i know 1000s of people are struggling out there at the moment.

i just dont want to do the wrong thing.

Regards

Sean

MW123

https://forum.scope.org.uk/discussion/comment/911597#Comment_911597

@Mrevertonone

I question the definition of debt in this context and do not fully agree with Albus, that paying off holiday balances constitutes debt repayment. Generally, debt refers to money borrowed from a lender with the expectation of repayment, often with interest.

When you use your own savings, cash, or pension to pay off a holiday balance, it does not fit the traditional definition of borrowing or debt. While paying off a holiday balance might reduce your overall debt, the balance itself is not typically classified as debt since no money is being borrowed from a lender in this instance.

Sean, I highly recommend contacting the DWP to discuss how these expenditures might impact your benefits. They can provide specific advice to ensure your holiday plans do not adversely affect your entitlements.

poppy123456

https://forum.scope.org.uk/discussion/comment/911701#Comment_911701

Sorry @Albus_Scope but I'm going to have to respectfully disagree with you here. It's not a debt, it's a luxury and no money has been borrowed for it to be a debt.

As for contacting DWP to ask for advice on this then they will not be able to give advice before a change has taken place. If your capital did go above the lower limit and you paid off your holiday then it will be down to a decision maker to make the decision on whether it would be DoC or not but not until you've actually paid off that holiday.

MW123

https://forum.scope.org.uk/discussion/comment/911849#Comment_911849

Thank you, Poppy, for clarifying how the DWP handles situations like this.

It is nice to see you back; you were missed, and I hope you and your daughter had a thoroughly enjoyable holiday.

Mrevertonone

Hi Guys

Thank you all for your imput, i dont think taking 25% of my pension would be worth all the hassle with the DWP, and yes its good to have Poppy back :o)

Regards

Sean

poppy123456

@MW123 thank you! We had an amazing time! @Mrevertonone thank you. It doesn't mean you can't drawn down the lump sum because it will be capital and no Income. If your capital will be less than £6,000 once you've had the lump sum then there's no affect on your UC. You still need to report it because it's a pension withdrawal.