Lump Sum Pension whilst on Universal Credit

[TYRETIM59]

Good Afternoon

I am currently on Universal Credit whilst i await a hip replacement - I have received a letter from my private pension provider saying that i can cash my pension in in January which to be honest couldnt come at a better time as i am really struggling for money at the moment!

The amount that i could take as a lump sum is £11,500 - am i right in thinking that i receive 25% tax free and the other 75% is taxed at my regular amount of 20% - how does the fact that i have been on universal credit for pretty much all of this financial year affect this - or does it have nothing to do with it?

Thank you :)

I don't know about the tax position but I'm fairly sure the lump sum will be capital from a UC perspective.

It won’t affect anything you’ve already been entitled to and paid. But it will be treated as unearned income and be deducted £1 for £1 off your UC. And you’ll have to spend over half of it before you can get UC again. If you’re getting a fair chunk of UC like housing element too it might be better not to withdraw it.are you expecting to be well enough to go back to work soon? Because if you were and the money was needed for something like a vehicle or home improvement then I’d draw that lump just before coming off UC so you get the best of both worlds.

Ah i didnt realise that! I have every intention of goin back to work once ive recovered from the operation - i just have no idea when that will be!