benefit means testing for savings

rightfoot_shifter

Maybe a question for a different forum but I'm new here so here goes:
My company are planning redundancies so I'm planning the worst. How soon do the benefits office start asking about savings & how far back do they dig? Do endowment policies(non-mortgage linked) count as savings? It has a life insurance aspect to it.
If, after redundancy, I were to use savings for home improvements whilst on contibution JSA, could I be judged as depriving myself by reducing savings, & thereby jeopardising benefits?

Jules

Cont JSA is paid for 6 months if you have enough NI contributions and doesn't take any savings into account so you don't need to worry at the minute.

If after 6 months you go onto Income based JSA, this will depend on any household income - ie partners wages etc, then savings will be counted. Anything under £6000 ignored and a tarrif income of £1 for every £250 over £6000 up to £16000. Over £16k and no benefit is payable.

Endownment policies may count as savings but thats up to the decision maker.

ceridwen

I'll be interested to see the answer to this myself - as I often wonder whether I could spend any savings I have myself during that initial 6 months of unemployment (ie when I would be on contributions-based benefits, rather than the subsequent means-tested benefits).

I do recall the comment from cw18 the other day that when the DWP says "savings" they mean literally every single penny you have to your name (even down to the cash in your purse or wallet). I guess thats why they call it a "capital" limit of £6,000 - rather than a "savings" limit of that figure. If someone asked me how much I have in the way of savings - the truthful answer would be "nothing". "Capital" on the other hand - say £40 in my purse, a couple of hundred pounds of £2 coins, a bit in Euros that I have kept from my last holiday (rather than lose money changing it to and from one currency to another) and some money set aside and reserved in my bank account for paying bills. But I truthfully dont have any savings. So - be careful on that point.

In fact I sometimes whether the "clock starts counting" even when one is under notice of redundancy - but I would imagine one can spend ones income freely whilst actually still serving out a notice period - after all, at that point, you dont know whether that job loss is actually going to cause you to be unemployed as a result or no (you might get another job literally the next day and never have to claim benefit).

ceridwen

I see Jules and I cross-posted.

So - thats some clarification. What I am wondering is whether the DWP asks for recent bank statements - ie would ask at month 7 for the last however-many-months-worth of bank statements. I had the vague idea from somewhere that they ask for the last 4 months worth??????

So - wondering whether one needs to spend any redundancy money in the first 2 months of unemployment - and then give them those bank statements for the months 3 onwards if one is unemployed long enough to end up on means-tested benefits?

I would also be interested to know where the D.W.P. expects one to "store" any savings over and above £6,000 in order to receive the rate of interest on them that they say you will be getting? I'd like to put my money in that place myself - as its likely to be higher interest than anywhere I can find (errrr...that was said a bit tongue in cheek - but, seriously, I would be interested).

EDIT: hMM.....thinking about it further.....that "tariff income" of £1 per £250 saved. Does that mean that they have lowered the rate of interest they expect people to be getting on their savings to a more realistic one than it used to be? Am I correct in interpreting that as meaning that they assume one gets £1 interest per year on each £250 saved over £6,000? (ie £1,000 "surplus" savings would be presumed to be getting £4 p.a. interest - if my maths is correct that would make it 0.4% interest rate they assume you are getting)?

Jules

I don't know about the bank statements but the now have full access to bank accounts via their computer systems so I don't think it would matter when the money was spent they would see it! This was one of the reasons I didn't sign on when I was made redundant I didn't fancy them looking through my accounts.

I remember years ago when my MIL was on Income Support, each year she was called in with a years worth of bank statements and they went through each transaction, I thought this was awful but its worse now they can look when they feel like it.

If you pay off any debts ie credit cards, loans, mortgage etc then this is discounted, you are allowed to spend it on debts. If you can show the spend was necessary then there shouldn't be a problem but it will depend on the individual decision maker. Keep receipts and be prepared to justify every spend.

The tariff income is on a weekly basis so you lose £4 benefit each week for every £1000 savings over £6000 up to £16000 then you lose it all.

bunny999

Can they access any bank account or just those of people claiming benefit ?

ceridwen

My head hurts now - as I'm a bit "dyslexic" at maths. So £4 assumed interest per WEEK on £1,000 would mean they assume one is getting £208 interest per YEAR on each £1,000? - ie an interest rate of somewheres around 20%?

Have I got that right? Is it really £4 per WEEK? Now I seriously want to know where one can get that rate of interest.....:cool: ..not to mention enough extra to allow for the necessary inflation interest one needs on savings for them just to keep pace.

I know they were assuming a wildly unrealistic rate of interest on "surplus" savings a while back - but this looks they have gone into the realms of Cloud Cuckoo Land....:cool:

If one receives, say, £8,000 redundancy payoff - then what is the best thing to do about that "surplus" £2,000? It looks as if one would be losing some of the basic £60.50 benefit per week by them taking off you WAY more in interest than you were actually getting on that £2,000 and thus your benefit income wouldnt even reach the lowly figure of that £60.50 per week.....??????? Presumably that cant be the case - can it?

Jules

Hi ceridwen
It's not that they see it as interest but as income. They expect you to use £4 per £1000 of your savings as income per week, nothing to do with interest.

For someone made redundant it wouldn't apply for the 1st 6 months if they were claiming cont based JSA but after 6 months it would.
£8,000 savings and they would lose £8 per week from their benefit. They would be expected to take this £8 from their savings.

As the savings reduce so will the tariff income.

Jules

bunny999 wrote: »

Can they access any bank account or just those of people claiming benefit ?

It's only those claiming benefits etc as far as I'm aware.

LittleVoice

For JSA purposes, for those under 60, the assumed income from capital is £1 per week for each £250 or part thereof on the amount above £6000, basically 20% gross interest.

Of course, the government knows that it is not possible to achieve this rate on savings - but remember that the interest on the first £6000 have not been taken into account. For someone who had £7000 of capital, they could fairly easily be getting 3% gross (= £4/week) so not unrealistic when taken together. And, of course, you would need to use that "excess" capital in order to substitute for the loss of benefits. After all part of the reason for saving is to provide for "a rainy day" - and being unemployed is such a time.

mardatha

Well just take out a set sum from your bank, every week of that first spell of unemployment, and if quizzed then tell them you needed that to live on cos their rates of benefit are too low. Then shove it under the mattress !