People should be rewarded for paying to their pension when on Universal Credit

I’m writing to let you know, following your previous articles, that Universal Credit are continuing to incorrectly not recognise pension payment contributions when calculating net income for the purpose of UC awards.

I recently started paying £200 per month by direct debit into a personal pension as well as my works pension, to bring my total pension contributions up to 15 per cent of my gross salary.

Despite reporting this on my journal online they have repeatedly told me that I cannot have my net pay award adjusted to reflect the total pension payments that I am making.

They have now ignored my request for a mandatory reconsideration of this decision so I will hopefully raise a tribunal claim in due course.

If you’ve got a problem, you can email for help Steve Webb: Get in touch with your problem at pensionquestions@thisismoney.co.uk

Steve Webb looking very smart!

Steve Webb replies (without adverts)

This is an issue that we have been raising on This is Money for several years and it is deeply frustrating that DWP is still getting it wrong.

You certainly should not have to go to a benefit tribunal to get it to apply the rules correctly.The background to the issue is that when income is measured for Universal Credit, the Government should deduct any money you pay into a pension.

This is intended to help and encourage people who are on UC, perhaps only temporarily, to keep saving for retirement.For those who pay into a workplace pension, the process is straightforward, as the information is transmitted directly by your employer to the Department for Work and Pensions under a process known as ‘real-time information’.

Your workplace pension contributions should be deducted without any further action on your part.For the self-employed, there is a standard process for reporting deductions such as pension contributions.

In principle, this should pick up personal pension contributions in a reasonably systematic way.But the situation which their systems seem unable to cope with is where an employee chooses to make voluntary contributions into a personal pension separately to anything deducted via your pay packet.

If you notify UC of your payments through your ‘journal’, and provide any necessary documentary evidence, they should – in theory – increase your UC award to reflect the fact that you are paying into a pension.Unfortunately, we repeatedly hear of people being told that this cannot be done

I first wrote about this issue in a column in summer 2024 and we then heard from a number of readers who had all had the same experience.We contacted DWP, which dealt with the individual cases, and we hoped that the matter was then resolved.

But we have continued to hear from time to time from more people who are still finding that frontline staff simply do not understand the rules, and your experiences are a particularly extreme case.

I contacted DWP on your behalf and it has accepted that your pension contributions should have been deducted all along and has now revised your Universal Credit award.It has told you that you should receive an extra £110 per month as a result, though you tell me that you have not actually received this extra money yet.

A DWP spokesman said:

‘We have resolved this issue and informed your reader.’We have improved guidance for staff to accurately assess Universal Credit entitlement to help prevent this issue happening again.’

Whilst I’m pleased that DWP has accepted the mistake and that extra training has been put in place, I cannot help wondering how many other people have been fobbed off and perhaps simply given up.