Pension lump sums and DWP

eldritch

Hi,

I have read similar questions on here but I need a more specific answer. My Mam is on UC due to long term disability, recently she has been talking about how she will be able to get her pension lump sum soon, and her monthly payments.

She knows that the monthly payments will affect her UC, but she is unsure on what to do about her lump sum, as she wants to basically spend the majority if not all of it on a new car/van. She needs a van really to fit her wheelchair into, but she doesn’t know if she can get this lump sum and then spend it on the van without it affecting her UC.

Anyone have any clue? TIA

poppy123456

As she's claiming UC in my opinion it doesn't make financial sense to have a weekly/monthly income from a pension because it will be deducted £1 for £1 from her UC entitlement.

Lump sums are treated as capital. Capital of more than £6,000 would mean a deduction of £4,35/month for every £250 or part thereof over that amount, up to £16,000. Capital of more than £16,000 would mean entitlement to UC would end.

For UC what counts is your circumstances on the last day of each assessment period. There's not really any definition of deprivation of capital. However, if she buys the most expensive van there could be issues. Regardless, if she has a lump sum withdrawal, she needs to make sure she reports the changes and it would be down to a decision maker to decide whether she deprived herself of capital to buy a van. This isn't something they would be able to advise on or make a decision on before she buys that van.

eldritch

https://forum.scope.org.uk/discussion/comment/971799#Comment_971799

Thank you for your reply! So you believe that she should just not receive her monthly pension payment? I am unsure of how much it is but it won’t be something she could live off of, especially with her needing to financially support my sister who has mental disabilities.

I am still unsure as to what she should do, she does need a car/van as she doesn’t actually have one, she just borrows my car but i’m moving further away so it won’t be so easy to lend it to her, and clearly we have no idea what they would class as “too much” to spend on a car…

poppy123456

It wouldn't be financially worth her having an income from her pension because it would just reduce her UC by the same amount.

For the vehicle it will depend on how much it is. Of course she can buy one and there's no rules against this but they may ask questions for example if she bought a vehicle that cost £30,000. It's always difficult to advise with deprivation of capital.

eldritch

https://forum.scope.org.uk/discussion/comment/972053#Comment_972053

Hmm I see, so if she explained to them that she wants to use it to buy a car then maybe they could advise on what would happen? Or would they not know until it was done. She was thinking she could buy the car and if they say anything about it being an unnecessary purchase she would just sell it and live off of that money…i’m just trying to make sure she isn’t accidentally committing fraud really.

poppy123456

They will not be able to give any information or advice. This is because they can't make a decision on something before it actually happens. If it's a used car she's buying then most likely it would be fine. I don't know how much we are talking about here so it's difficult to advise. (I'm not asking you to tell me how much it is)