LCWRA and private pension
qwerty1234
Online Community Member Posts: 2 Listener
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
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
0
Comments
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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.0
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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
Q0 -
When she reaches state pension age if she's a single person then her UC will end anyway.0
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