Jobseeker's Allowance / Income Support

ARM10

Jobseeker's Allowance, Housing Benefit, Income Support, and Council Tax Benefit are all not claimable if you have savings over £16,000. I presume they expect you to live off your savings, but what if this was invested in a fixed return bond which isn't due to mature for another 4 years ?

Technically you wouldn't be eligible for those benefits, but in practice you can't live off the savings since you don't have withdrawal access to the money. How would the local authorities deal with this situation ?

Any thoughts ?

dseventy

These things usually have a "surrender value" which is what the claim i based on. That will be the amount used.

D70

ARM10

You can surrender a life insurance or endowment policy before the maturity date as that option is built into the financial product.

I'm referring to fixed rate bonds where withdrawals during the term of the product are not permitted. Investments held in hedge funds and private equity funds will also have a similar "lock-up" period. The "surrender value" is the amount of money you would receive if you exit the investment immediately - technically zero. Is this how they will calculate it ?

NASA_2

If you are already investing and then need to make a claim - that can usually be disregarded.

If you invest in a scheme right before claiming then the DM will be entitled to think that you have done so solely to avoid having the capital affect your beenfits and, in my opinion, should treat it as being available.

zzzLazyDaisy

As far as I am aware, means tested benefits do not take into account insurances that have not yet matured, even though they may have a surrender value in theory.

However, all capital funds must be declared, including those in fixed term accounts.

I suppose if someone puts 16k+ into fixed term accounts leaving themselves with no access to ready cash, then they would be in difficulties as they would not be entitled to LHA/CTB but in reality most such accounts are accessible with a penalty, and usually people have a certain amount of more liquid savings in addition to the money in the fixed term bond, which they can access to live off.

Edited to add - I don't know how stock market bonds and trusts are treated, but a phone call to the local authority should give you the answer.

ARM10

I looked closely at the rules and regulations and found the relevant ones. It appears safe to make for example a 5 year long-term investment now and still claim Housing Benefit and Council Tax Benefit if you run into difficulty 3 years down the line.

I could not find any regulations clearly stating this applies to Income Support or Jobseeker's Allowance though

Capital treated as income [HB Reg 41;CTB Reg 31]

Capital you are paid in instalments will be treated as income if the money you have still to come, when added to other capital you already have, is more than £16,000.


Any money you get from a life or fixed-term annuity is treated as income, but any surrender value is ignored. [HB Reg 34(2), CTB Reg 25(2)]

Life assurance policies [HB Sch 6.17, HB(SPC) Sch 6.11; CTB Sch5.17, CTB(SPC) Sch 4.11]

The surrender value of life assurance policies is not taken into account when assessing HB/CTB.

Notional capital [HB Reg 49, HB(SPC) Reg 47; CTB Reg 39, CTB(SPC) Reg 37]

Your local council may think that there is capital which you could get but which you do not have. This is known as notional capital because you do not actually possess that capital.

The rules for notional capital do not apply in the following situations: [HB Reg 49(2), HB(SPC) Reg 47; CTB Reg 39(2), CTB(SPC) Reg 37]

• if the source is a discretionary trust
• or if the source is a trust set up from money from a payment for a personal injury
• or if the source is funds held by the ‘Court of Protection’, that derive from a payment for a personal injury
• or where a loan may be secured against capital that you own but which is not counted for HB – for example a second mortgage on your home
• or where you are waiting for a payment to be made and the date of payment is not within your control.