Future unemployment and savings preparation

basilb_3

What should you do with savings now, if redundancy is a real possibility?

You can get Income Support if savings are less then £6000. If its over £16000 you get nothing. If in between then the amount you receive is reduced. I understand you cannot get round this once unemployed by spending the money on say reducing your mortgage, as its still considered to still exist as savings. So whats the answer, how should you prepare?

If its possible should you - if you have a private pension - pay AVCs (additional voluntary contributions) but noting that this money is then not obtainable until retirement but it does have the advantage of tax relief? How about if you pay extra towards your mortgage? Take nationwide, they have a "mortgage overpayment reserve" which reduces your interest but you can take the money back out at any time so is this considerd part of savings? Also I've also seen comments that you could buy gold or a vintage car etc and this is not included as savings, is this true? Finally with the way things are going its likely the government may tamper with what is considered to be savings. What may we see change?

DX2

Are you a lone parent or a carer? If not you won't be claiming Income support.

basilb_3

I'm married with kids and as far as I undertand it I would get income support - once the savings have run below £6000. In case you are wondering I am at the bottom end of the ladder not the top.

Nearly every year I've been in the position of continually having to jump from one position to another to avoid redundancy, and up till now my only decision was to save all my money, just in case. I thought no more of it other than that unitl now where I've found out I should have spent it like everyone else. Which makes me wonder how the benefits agency would see my case if, having been made redundant, I then go ahead and do, what most people normally would have done, but which I've forgone and replace my 9 year old astra, take a holiday (not had a proper one in 8 years) redecorate, fix the plumbing, replaced the boiler, refurbished the house and so on.

bunny999

You wouldn't get income support, you would have to claim JSA. If you have paid enough conts this is not means tested for the first six months. If you spent money in order to claim benefits this is called deprivation of assets / fraud and any application for means tested benefits will be treated as if you still had the money.

paddedjohn

Why dont you just use the cash youve got and use it to live on instead of trying to find a way of abusing the system? You'd sleep better at night id bet.

DX2

basilb wrote: »

I'm married with kids and as far as I undertand it I would get income support

I'm afraid you understand incorrectly.
Who can get Income Support

It's for people who all the following apply to:

• are between age 16 and the age they can get Pension Credit
• have a low income
• work less than 16 hours a week
• aren't in full-time study (but there are some exceptions)
• don't get Jobseeker's Allowance or Employment and Support Allowance
• don't have savings above £16,000
• live in Great Britain

You may get Income Support if you are one of the following:

• a lone parent
• on parental or paternity leave
• a carer
• a refugee learning English who arrived less than a year ago

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/On_a_low_income/DG_10018708

basilb_3

paddleJohn, if you knew what I'd been through I don't think you would have posted your comment.

DX2, sorry I still do not understand why I would not receive benefits if I am unemployed with no income and have 3 dependents, 2 of which need full time care but for which the state provides nothing -well they would if I threw them out (as maybe paddleJohn would advise). I've save every penny for more than 10 years but that does not mean I've had to fork out for my family. And now I'm worried that I will lose my job, my savings (for looking after my family), my home and what that will mean for my family. I don't think I will continue posting as this feels the same as dealing with the state rather than sympathetic strangers. Oh brave new world...

DX2

basilb wrote: »

DX2, sorry I still do not understand why I would not receive benefits if I am unemployed with no income

I never said you wouldn't be eligible for state assistance you won't be eligible for Income Support, however you need to be looking along the lines of Jobseekers allowance.

Income support = Lone parents and carers (people who care for disabled people)

TOBRUK

Hi basilb, DX2 hasn't said that you won't receive any benefit only pointed out that you may not get IS as you have stated you are married. DX2 only posted 'who can get Income Support' which is from the government website.

Sixer

Does anybody know the actual answers to the OP's original questions?

Eg: do pension contributions count as deprivation of capital?

If they do, then the OP needs to know. If they don't, then what is the problem here? It would be neither fraud, nor illegal. It would be no different than moving money around to minimise tax liability.

I don't know, OP, I'm sorry.

MrsManda

I don't know much about it but from googling I've found a document from AgeUK about Capital income and means tested benefit (link opens into a pdf)

This states that 'You are not considered to have deprived yourself of capital if you have paid off debts or reasonable spending'

so in terms of overpaying the mortgage the OP should be OK.

The HMRC has a section on their website about Notional Income and the Deprivation of Assets. From their point of view it seems that the important thing is the motive and timing of the disposal of income. So if you wait until you're made redundant or know that redundancy is imminent then spend all your savings on voluntary payments, cars etc... and apply to claim means-tested benefits you're likely to be penalised for deprivation of assets.

Again, I have no knowledge about this other than what I've just read but hope the links will provide you with some of the information you need.