ISAs when you're claiming benefits

DemiDee

I have been out of work since June last year, suffering from ongoing clinical depression as a result of losing a loved one. Since then, I have worked for pretty much all of my life and built up savings, most of which I've used for an ISA. However, now I'm wondering whether ISAs are simply the Governement's way of keeping track of our savings, because it seems that those who have been wise enough to save rather than spend are penalised if they ever need to claim any benefit.

It has all made me wonder whether it is worth holding savings at all, even though I once saw my savings as a safety net and (being self employed) a pension. Unfortunately, because of my ISA savings, I can only claim for the contributions part of my benefit - just £64pw. It seems unfair that those who have saved (and often thus sacrificed) are penalised due to our savings.

I'm now thinking of spending all my savings on a house extention or paying more off the mortgage instead of keeping my ISA. That way, if I'm sick in the future or need benefits of any kind, then my savings won't be a hinderance, but neither will I have the comfort of that safety net.

Any advice most appreciated!

noh

You are not being penalised for having savings.
You said yourself that you saw your savings as a safety net now is the time that the saftey net needs to be put to use.

OneADay

The benefits system was "tweaked" about 10 years ago I think so those who had savings and had worked could only get contribution based jsa for 6 months and then you are slung out of the door.

Those without savings get the income based jsa for as long as they try to get work - its daft.

I mean if you cannot find work in 6 months? Plus savers are penalised by not getting the extra benefits offered to income based jsa - i.e. dental, prescriptions etc.

Spreading your savings - wont make a difference as its based on your NI number so can be tracked I guess.

Paying off mortgage a good idea but then you have to wipe out your savings to below the 16k limit (I think its 16k). It really depends on your circumstance - are you expecting to get back into work soon? Then its not worth throwing all your money into one pot. Remember jsa only pays 64.30 a week (contribution based) so you are not getting much advantage by using up your savings.

I don't think ISA is a tracking mechanism but the system as a whole is a con to stop jobless figures including millions who cannot claim income based jsa and hence giving illusion of better employment figures.