Pension withdrawal

northernlass123
northernlass123 Online Community Member Posts: 8 Listener
in Universal Credit (UC)

Hi... If I withdraw a large sum £25000 from a pension, which will be used to pay of a loan, will this stop my universal credit payments and if so for how long

Thanks for any advice

Comments

  • Albus_Scope
    Albus_Scope Posts: 9,845 Scope Online Community Coordinator

    Hey @northernlass123

    A lump sum withdrawal from your pension pot will be treated as capital, meaning it will be considered as part of your savings when determining your Universal Credit eligibility, so taking out that much would theoretically stop your UC claim completely. 

  • northernlass123
    northernlass123 Online Community Member Posts: 8 Listener

    Do you know how much I could take out without it stopping my UC

  • Kimi87
    Kimi87 Online Community Member Posts: 5,910 Championing
    edited April 7

    Is it a formal loan from a lender?

    I agree with Albus advice, however debt repayment is allowed under UC rules, I think if you make sure the withdrawal and payment is within the same Assessment Period, you should be okay.

  • Albus_Scope
    Albus_Scope Posts: 9,845 Scope Online Community Coordinator

    You could take out £5,999.99 without it affecting your UC. Anything between £6k and 15,999.99 will see a gradual reduction in your UC as the amount of savings increases. Anything over £16k will stop your UC.

  • northernlass123
    northernlass123 Online Community Member Posts: 8 Listener

    Yes it's a personal loan that I am wanting to pay off

  • northernlass123
    northernlass123 Online Community Member Posts: 8 Listener

    Could I do 4 x £6000. over different months?

  • OverlyAnxious
    OverlyAnxious Online Community Member Posts: 4,601 Championing

    Do you already have any savings? If so, you can only take out the amount that takes the total up to £6000 before deductions could be applied.

    For example, if you have £1000 in the bank, you could only take £5000 of pension each time.

    In theory, as long as you stay below £16,000 at all times, your claim should not close. And as capital is only checked on the final day of the assessment period, you could take a large amount out in the middle of a payment period without it affecting anything, as long as it doesn't go above £16k at all. This is a bit of a grey area though. There have been tribunal cases about it but obviously best not to have to go that far.

  • northernlass123
    northernlass123 Online Community Member Posts: 8 Listener

    I do not have any savings... So in theory if I take £15000 out I should be OK

  • OverlyAnxious
    OverlyAnxious Online Community Member Posts: 4,601 Championing
    https://forum.scope.org.uk/discussion/comment/1013742#Comment_1013742

    Yes, as long as you keep below £16k total, the claim won't close.

    And in theory, as long as that £15k is spent on a debt payment before the final day of your assessment period, there won't be any deductions made for excess savings, and no possibility of DWP claiming deprivation of capital either.

  • northernlass123
    northernlass123 Online Community Member Posts: 8 Listener

    OK cool thanks for the help... Its just so confusing lol

Categories