Council takes 85% of my annuity

Venator

I have a small annuity of £1440 per annum, paid as a lump sum every year. This is the amount I am left with after tax. I am unemployed at the moment after having been on ESA for nearly two years, now receiving JSA contributions rate. The council offset my rent and council tax benefits by deducting 85% of my annuity leaving me with a paltry 15%. I was wondering if this is normal as the way they calculate it is unfair. They deduct 65% of the total for rent then 20% of the total for council tax. Surely a fairer way is to deduct 20% less the 65% already deducted. I am seriously thinking of telling my provider just to cancel the annuity and telling the coucil to get stuffed and if it wasn't for the fact i may be entering the job market again I would. Are these deductions normal?.

Pepzofio

Yes, this is completely normal.

Furthermore, if you did choose not to claim your annuity they would treat it as 'notional income' (i.e. income that you are entitled to but have deprived yourself of, with the specific intention of claiming more benefit), so they would still make the deductions as if you were in receipt of it.

HappyMJ

Venator wrote: »

I have a small annuity of £1440 per annum, paid as a lump sum every year. This is the amount I am left with after tax. I am unemployed at the moment after having been on ESA for nearly two years, now receiving JSA contributions rate. The council offset my rent and council tax benefits by deducting 85% of my annuity leaving me with a paltry 15%. I was wondering if this is normal as the way they calculate it is unfair. They deduct 65% of the total for rent then 20% of the total for council tax. Surely a fairer way is to deduct 20% less the 65% already deducted. I am seriously thinking of telling my provider just to cancel the annuity and telling the coucil to get stuffed and if it wasn't for the fact i may be entering the job market again I would. Are these deductions normal?.

Yes quite normal. When and hopefully "if" you did go onto income based JSA then the amount will be taken £ for £ from your income based JSA instead and you will get full HB and CTB (I'm assuming a few things here such as being single and having minimal assets)

Venator

Thanks for the info. It seems to me a double standard when well off folks can give to charity and avoid taxes while I would be penalised for say doing the same. It makes a laughing stock of saving up for a private pension to benefit you in later life when the only ones it benefits are the powers that be. No wonder young ones today ignore providing for themselves in later life.

DavidLaGuardia

Venator wrote: »

It seems to me a double standard when well off folks can give to charity and avoid taxes while I would be penalised for say doing the same.

How are you being penalized when you are recieving the benefits that you do? Benefits are meant to help those who need it. If you have some income of your own, then surely it is right that you shoulder some of the burden?

property.advert

DavidLaGuardia wrote: »

How are you being penalized when you are recieving the benefits that you do? Benefits are meant to help those who need it. If you have some income of your own, then surely it is right that you shoulder some of the burden?

I think the correct thought process is "why should I bother saving anything for retirement when everything I get simply replaces benefits I would get anyway if I wasted my money and never saved a penny".

Of course it is highlighted when the pension is so low but to only receive 15% is ridiculous. Unless your pension is likely to be much larger than the state benefits, it does beg the question why should you save.

jamesd

Venator wrote: »

It seems to me a double standard when well off folks can give to charity and avoid taxes while I would be penalised for say doing the same. It makes a laughing stock of saving up for a private pension to benefit you in later life when the only ones it benefits are the powers that be. No wonder young ones today ignore providing for themselves in later life.

It is a double standard. Yours.

You: so little put away for bad contingencies that you may have to rely on means tested benefits.

The well off: enough put away so that they don't need means tested benefits or the state interference that comes with means testing.

It's pretty simple, if you need means tested benefits you get to deal with the means testing that is there to ensure that it only pays what is necessary to maintain the minimal reasonable standard of living that those means tested benefits are supposed to be providing.

Compare to someone like me who's been saving more than 60% of my income for years now. I can now live at a decent lifestyle with no need for means tested benefits even if I never worked again. And because of that I also won't be eligible for any means tested benefits. But I'll live better than I would if they were all the income I was getting. Losing the benefits beats getting them and having to live on benefit level income.

This doesn't mean that I don't sympathise with your position. It's just that it is a position that you in part got yourself into by not having accumulated enough money so you don't need those means tested benefits that you may have to rely on later.

jamesd

property.advert wrote: »

Unless your pension is likely to be much larger than the state benefits, it does beg the question why should you save.

Perhaps because this government plans to set a new pension level thats high enough so that fewer people will be eligible for means tested benefits in retirement and any income is likely to be kept 100% by them. Also because it's better not to have to live on benefit level income if you can arrange to do better than that.

teajug

jamesd wrote: »

Perhaps because this government plans to set a new pension level thats high enough so that fewer people will be eligible for means tested benefits in retirement and any income is likely to be kept 100% by them. Also because it's better not to have to live on benefit level income if you can arrange to do better than that.

That is true, but the UK has lowest paid pensions in EU, then it is not saying much. £140.00 whenever it comes in it will mean that that the UK is still the lowest paid pensions in EU and it looks like it will continue to stay like this under this government.

Look at the bottom of the link and you will see that we are the lowest paid pensioners in EU.

http://www.pension100.co.uk/pensions/worsteupension1.htm

bilbo51

In fairness, I think you need to compare the amount of money the state gives out with the amount of money it takes in:

http://www.kpmg.com/CH/en/Library/Articles-Publications/Documents/Tax/pub-20111019-individual-income-tax-and-social-security-rate-survey-2011-en.pdf

See the histograms from p8 onward

margaretclare

The title of this thread is inaccurate. The council don't actually 'take' any of your annuity at all. What they do is not to 'give' you so much because you already 'have' this amount of money.

Comparison with other countries is futile. I think you would find that many countries pay a lot more tax than we do. In Denmark, for instance, I believe they pay about 50% of their income in return for the services they expect and enjoy.