what is the thinking behind ESA and savings?

damino

suppose a person was on ESA support group. income based, with disability premium. I guess £105+£7 I guess that'd be £112 a week? though i've heard it's £227/£228 a fortnight so £113 a week.

now a theoretical..

suppose then a parent died and left them £15,900

They'd get a huge drop in ESA income right?

like £40 a week less?

that's part 1 of the question.

now part 2 of it is
If they then had another £200, and so had £16,100 they could then apply to contribution based, then would their ESA go back up to £113 a week? is that right?

and part3 is..


Why if somebody has over £16K savings, do they switch to contribution based and pay the full ESA amount.
Whereas with £6-£16K savings they pay less?

i.e. What is their thinking behind it..
the/their rationale?

tomtom256

That they can use the money to support themself and save the state/tax payer money.

damino

no that can't be it, because given what I wrote, over 16K they pay the full amount. So the question is, what's the rationale?

Pricivius

Contribution-based only lasts for a limited amount of time.

There has to be a line drawn somewhere.

damino

well, to tomtom256, if the govt didn't pay the full amount to those with 16K+, and deducted so much £40 a week from them, if they have £15900 savings, then that 16K or £15900 could get used up pretty quickly, they'd have much less savings, and the govt would have to pay the full amount again. so that wouldn't be so good.

and to pricivus, I wouldn't call it drawing a line, because a person with 16K+ savings isn't getting more and more. They could just have that static amount. which the ESA in your thinking would tax them for each year. And anyhow, my point is it looks like the person with £16100 is in a better situation than the person with £15900. My question is what is the rationale behind that?

and , yes if somebody works, then goes on ESA, they get contribution based for a period of time then it runs out after a year or a year and 6 months(or so i've heard), and they go income based. But the point is, as I understand it, is that those with over 16K savings go contribution based and that contribution based ESA won't run out as long as they have those savings over 16k. And I suppose that makes sense as it'd be tough for them to cut a huge amount from their ESA. But I guess it's unfortunate if somebody has £15k as they would get much less. But that's what i'm getting at.

Anyhow to make it simpler. Put all that above aside


Before I even ask what the rationale is. I suppose I should confirm.

Does the person with over 16K savings get the full amount in ESA, while a person with say 15K savings, gets a big reduction in ESA?

princessdon

Income based ESA is determined by savings - but also gives other benefits like prescriptions, housing benefit, council tax benefit etc and other things like fuel reductions Xmas bonus etc.

Cont. based savings don't apply - however they need to have met the ni requirements for cont based and get no extras such as above.

If the person qualifies for cont based and had no other payments they'd be on that benefit - if you think they should then ask to swap, but you are normally on cont based until you swap to income if you had the necessary ni credits.

tomtom256

Only if on contribution based as savings have no effect on any none means tested benefit.

If they are on income related benefits then it has an effect.

But someone one on income related ESA wouldn't get a lot less as this automatically entitles them to HB & CTB as a passported benefit on top of the ESA.

Contribution based ESA wouldn't be automatically entitled to HB & CTB.

Its swings and round abouts.

As for the logic, they just set an amount that they thought would be reasonable for savings, misread the original question.

princessdon

damino wrote: »

suppose a person was on ESA support group. income based, with disability premium. I guess £105+£7 I guess that'd be £112 a week? though i've heard it's £227/£228 a fortnight so £113 a week.

now a theoretical..

suppose then a parent died and left them £15,900

They'd get a huge drop in ESA income right?

like £40 a week less? Probably more - and lose other means tested benefits. That's the key word here means tested.

that's part 1 of the question.

now part 2 of it is
If they then had another £200, and so had £16,100 they could then apply to contribution based, then would their ESA go back up to £113 a week? is that right?

No they'd need to be eligible for cont based and lose other benefits of income related. You don't get to apply if ineligible.

and part3 is..


Why if somebody has over £16K savings, do they switch to contribution based and pay the full ESA amount.
Whereas with £6-£16K savings they pay less?

i.e. What is their thinking behind it..
the/their rationale?

The rationale is that people who paid in get some breathing space with savings whilst denying them other benefits. Sorry my comments were supposed to be in red - roody phone!

damino

yes, thanks tomtom and princess.. now I see re HB. That makes more sense.

But I see the way it works with HB is it gets reduced until 16K then it is removed completely.

not so unfair for anybody I suppose

Though still then a person with 16100 savings is a lot better off than a person with 15900, as the 16100 person still gets full ESA. Is that right?

princessdon

Anyone with savings is not entitled to HB, council tax etc if they have savings over £16k

When someone becomes entitled to a benefits like JSA or ESA they look at their means.

If they have means (income, savings) then this rules out Income based. Next thing they look at is whether they have enough contributions, IF they do then they get Cont Based (no other benefits) for a set period of time. ESA Wrag this is 12 months, JSA it is 6 months and ESA Support is indefinite I beleive.

If say someone had £20K and was put in Cont based, once their savings dwindled they can then apply to Income Based. Also if someone had £20K and no NI they'd get nothing as not entitled to Cont based as no NI.

However, you are very correct that for a short period of time someone on cont based will get more money than if on IB due to savings as their HB etc is also reduced. That is unfortunate, however, for what could have been months if not years they had access to additional benefits that those on Cont based didn't get.

End of the day means tested benefits are given to people who said they had no means at all to support themselves, if they then get means this is removed or reduced.

If they have access to Cont based they can always try to reapply during this period but they'd need to qualify for Cont based.

rogerblack

If a properly configured trust was setup first, or in the parents will, they can have access to the money to pay specific bills without it affecting any means tested benefit.
This cannot be done after they've inherited.