Universal Credit 16k+ savings transistional protection?

cattermole

Interesting..although I wonder how many have actually done it! Who were debt free enough in the first place to not have monthly commitments based on their current earnings.

Taking their payslips to the Housing Benefit office etc etc

It would all fall down with a mortgage to pay as well because that is the average person's biggest outgoing.

Strange how all the ones who are claiming to do it or thinking about it, have CAPS for their names on that thread.

tinkledom

Lancashirehotpot wrote: »

Saving for retirement in a pension is a scam??

No, putting extra money away into a pension scheme which directly results in the lowering of their assessable income which in turn increases the level of WTC/CTC.


Not only do they get tax relief on the pension contribution but effectively get the pension contribution back via benefits. They would not be much worse off in terms of spendable income, yet have loaded their pension scheme to boot!


If they happen also to be above the income limit where Child Benefit stops, they can reduce their assessable income to just below the limit by putting extra money into a pension scheme and then they claim the Child Benefit.


That way they get the tax relief on the pension contribution as well as all of the Child Benefit that they would have lost.


One on the most, if not the best scam that I have seen for ages.


By the way none of the above is available to those who happen to have to live on benefits being either sick or unemployed. Seems a bit unjust to me.


And they talk about benefit claimants playing the system!!

nannytone_2

i think youre the last person that should be commenting on people creaming the benefits system

tinkledom

BigAunty wrote: »

I agree.

The storm around pension contributions being seen as some kind of bad loophole also existed under tax credits.

There was a thread on the pension forum on MSE by someone who worked out that if they put the bulk of their salary into pension contributions, they could merrily live off the tax credits and retire early with a massive pension when his children were too old for him to get further child tax credits.

Wish I bookmarked it now as it was an interesting read, particularly because people were saying 'no, you can't do this, its not allowed' but then couldn't find any proof in the benefit rules that forbade it.

Of course it's true. Civil Servants and members of other public body pension schemes have been doing exactly that for years since WTC first came in - it's called an AVC - Additional Voluntary Contribution. It's done to bring their assessable income down to gain an advantage under the Tax Credit system. If you work it just right, you can't lose. Whatever you lose by paying an AVC you gain in increased WTC's + you get tax relief on that AVC which increases that contribution yet again. You just can't lose.

tinkledom

cattermole wrote: »

Interesting..although I wonder how many have actually done it! Who were debt free enough in the first place to not have monthly commitments based on their current earnings.

Taking their payslips to the Housing Benefit office etc etc

It would all fall down with a mortgage to pay as well because that is the average person's biggest outgoing.

Strange how all the ones who are claiming to do it or thinking about it, have CAPS for their names on that thread.

Well the OP seems to be doing OK. They both work, and earn £15000 a year and have two children, and manage to save well over £16000.


What the OP hasn't said or disclosed is the £11000 a year extra they get from HMRC in Credits + max HB & CTB.


Try putting that in a calculator and see what happens if they put just enough of that £16,000 into a private pension to bring their income down to the lower threshold in order to obtain max WTC.

cattermole

Although one could argue that long term it may be a way of saving on benefit payouts?

Because ultimately they will have to take their pensions and so if they are reasonable pensions and private it will ease the burden on the state. And we all know in the future we will not be able to sustain the state pension levels with an increasing adult ageing population and a falling birth rate.

Look at Japan!! With the highest national debt of any country in the world. It's birth rate is so low and it's ageing population is unsustainable. There are very complex reasons to their falling birth rate too and some of that is linked to little or no immigration.

CTC are not really a benefit as such they are giving back tax if you are working.

Child benefit was a nice idea when it started and the main reason was to give women some money of their own to help them look after their children. Without being totally dependant on their husbands (whatever their income!!). Times have changed since then but we do need people to have children (again I refer you to Japan) so it's a little incentive. In Japan they give big incentives to have a 3rd child

So if it goes into a private pension it will still make people less dependent on the state in the future. Assuming all the private pensions pay out.

cattermole

tinkledom wrote: »

To be honest I don't know many that don't cream the system whether they work or not.


The system is there to be creamed - there is nothing illegal actually in maximising the income they work for or the benefits that they are entitled to claim.

Don't you cream what you can get out of the system using legal methods, be it DWP benefits. HMRC benefits, Social Services Benefits or even your local council?
Unfortunately with the benefit system you do have to know how each benefit may inter react with another, and which benefits open the best doors. According to some of your posts in the past you are doing quite nicely out of the various claims you have made.
and certainly not behind the door when there is something on offer as an extra.

Nanny count to 100 x

and watch this it's very interesting.

http://www.youtube.com/watch?v=Yil_cn_1gMo

Worth a watch re Japan if you haven't already seen it.

The most shocking thing is the number of over 65's going into prison. And they have the lowest crime rate in the world. The biggest in crime rate is in the over 65 age group.

tinkledom

cattermole wrote: »

Nanny count to 100 x

Why - it's the truth.

cattermole

tinkledom wrote: »

Of course it's true. Civil Servants and members of other public body pension schemes have been doing exactly that for years since WTC first came in - it's called an AVC - Additional Voluntary Contribution. It's done to bring their assessable income down to gain an advantage under the Tax Credit system. If you work it just right, you can't lose. Whatever you lose by paying an AVC you gain in increased WTC's + you get tax relief on that AVC which increases that contribution yet again. You just can't lose.

Assuming you have money spare to put into the AVC in the first place or can afford to loose from your monthly salary.

tinkledom

cattermole wrote: »

Nanny count to 100 x

and watch this it's very interesting.

http://www.youtube.com/watch?v=Yil_cn_1gMo

Worth a watch re Japan if you haven't already seen it.

The most shocking thing is the number of over 65's going into prison. And they have the lowest crime rate in the world. The biggest in crime rate is in the over 65 age group.

I see you have added a bit more to your post.


It doesn't surprise me that the over 65's are more likely than any other group to commit a crime even in the UK.


The advantage is in this country that you can play the age card and the associated illnesses that come with age and generally get away with a slap on the wrist instead of prison.