Universal credit and pension

[Imagineit]

I have been told that when I separate from my partner and live alone I can claim universal credit. Is it also worth me taking a break from my pension to get through this period of hardship or will that affect my UC claim?

Are you talking state pension or private?

Sorry, just realised that you meant pension contributions, not payments! (That'll teach me to try and multi-task!)

Any extra net pay that you get pay by stopping your pension contributions will reduce your UC. The "taper rate" is 55%, so if your net pay went up by £100, your UC would go down by £55.

The implications of taking a contribution holiday are not my area, I'm afraid.

Unless you are desperate I would say no. As a pp said for every extra £1 you take home. UC is reduced by 55p. Also you will be paying tax. Essentially for every 45p you reduce your pension by £1.20.

Uc is calculated after tax , NI and pension contributions are deducted so there's no point stopping your pension contributions really as you'd get less UC. I'd say if you can afford to keep contributing to your pension then you should do.

I just received my private pension as a lump sum due to finishing work early for ill health, the amount was £4170 after tax, how much will my universal credit be reduced please as I’m worried about spending any of it thank you

I just received my private pension as a lump sum due to finishing work early for ill health, the amount was £4170 after tax, how much will my universal credit be reduced please as I’m worried about spending any of it thank you

It would be counted as capital I imagine. If it doesn't take your total savings/ capital to over 6k you won't have any deductions.

There is so many mixed things, I’ve seen capital, earnings and also unearned income so I’m really lost on it tbh 😭

A pension lump sum will be treated as capital, and added to your existing capital. If the lump sum takes your (household if applicable) total savings over 6k then you need to declare it to uc and you will have a deduction (£1 for every £250 over £6k) from your uc payment each month until your savings falls under £6k again.

A monthly pension payment would be 'other income' and your monthly uc would be reduced £ for £.

Sorry, I meant a monthly pension payment would be unearned income, not other income.

Thank you for you reply, there is so many loop holes an mixed information, tysm

Sorry for all the questions, is this the same as I cashed whole pension out, so git the 25% tax free then paid tax on remaining 75% but was all paid together ? Ty