Personal Finance & Money Asked by Sam Fox on May 20, 2021
I am ask for a friend, who is expecting hard times soon. My friend is not computer literate, and I know nothing of the UK benefits system.
The best information I can find is
How do savings and lump sum pay-outs affect benefits?, which says
Some benefits are affected by the amount of money you have in savings, such as cash in a savings account, or investments in shares. These benefits are called means-tested benefits.
It has a link What counts as savings?, which says
Savings are counted as any money you can get hold of relatively easily, or financial products that can be sold on. These include:
- cash and money in bank or building society accounts, including current accounts that don’t pay interest
- National Savings and Investments savings account and Premium Bonds
- stocks and shares
- property, which is not your main home.
And, that is where I am unsure. It does not explicitly mention "SIPP" or "ISA", and I don’t know if one can get money from them "relatively easily" (although they can hold stocks & shares).
Can anyone point me at a (preferably UK government) site that explicitly says whether SIPP / ISA will be considered when someone claims UK benefits (especially housing, job seeker, low income)?
See UC Regs 2013 s46 https://www.legislation.gov.uk/uksi/2013/376/part/6/made/data.xht?view=snippet&wrap=true
and Schedule 10
https://www.legislation.gov.uk/ukdsi/2013/9780111531938/schedule/10
Everything is capital unless explicitly excluded, one such exclusion being:
"10.—(1) The value of any right to receive a pension under an occupational or personal pension scheme or any other pension scheme registered under section 153 of the Finance Act 2004(1)."
So the SIPP is not assessed, the ISA is.
In general if you dispose of capital, e.g., if you had £30k in an ISA and deposited into a pension a month before claiming benefits, then the assessors would be likely to deem that deliberate deprivation of capital, and you would be deemed to still have it, even though you no longer have access to it. A SIPP is not inherently deprivation, if you paid into it years ago that's completely fine, it all comes down to motivations. Note that if you have low income you CAN pay into a pension from said income, and this money will be exempt from both income tax (though not NI) and Universal Credit claw-back, though obviously the amount of money you have to live in will be less.
There are roughly three limits:
Note that these are rules generally applicable to working age people and particularly with children, who can obtain very large awards due to help with rent, etc. Single people will have generally lower entitlement. Pension credit has different capital rules, with no capital limit per se, but the capital held will be treated as income for each £500 over £10k, meaning no entitlement for anyone with lots of savings.
An ISA will always be capital, but not all benefits are assessed for capital - child benefit is withdrawn based on income, for example. However these will apply for rent (which for new claims would be via UC; there is no help for mortgage payments possible)
Correct answer by thelawnet on May 20, 2021
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