PruFund Cautious - not applicable for means testing?

Big_boy_q

Hi,

My mother is living with me, as she has sold her house.  And is now starting to look at putting her money for savings/investment.

Been talking to my financial advisor, and since we were looking at low-risk options, advised the PruFund Cautious - and said it was linked to a life policy therefore it is excluded from any means-testing.  As is not an true savings account or investment - as its a light life policy.  So if my mother needed additional help, money in this fund will be excluded from any wealth/means-testing.

This has made me think, if all of her money was transferred over to this type of investment, that is linked to a life policy (as I understand my name will be required due to my mother's age).  She will have NO Assets - and therefore be able to claim pension credits?

I understand she relieves £144 a week, but she will want more money and was planning to dip into her so-called savings.  But if she was able to receive pension credits, then there is no need for her to dip into her savings?

NedS

I have no knowledge of the investment in question, but I do have significant knowledge of the benefits system and your mother would likely fall foul of Deprivation of Capital rules whereby someone cannot deliberately deprive themselves of capital for the purpose of claiming (or claiming more) means tested benefits. She would likely be treated as if she still had the capital when calculating any entitlement to means tested benefits.

Alice_Holt

As NedS says the Deprivation of Capital rules would apply in these circumstances.

dunstonh

Been talking to my financial advisor, and since we were looking at low-risk options, advised the PruFund Cautious - and said it was linked to a life policy therefore it is excluded from any means-testing.

There is a little more to it than that.

if the investment was taken out with the intention of avoiding means tests than the local authority can bring it back into the means test.     It needs to be a coincidence. Not the intention.   

As is not an true savings account or investment - as its a light life policy.  

Investment bonds are a tax wrapper just like ISA, pensions or unwrapped.  It is wrong to refer to it as "not a true.." as it is.   

However,  the adviser would have a very hard job justifying an investment bond over ISA and unwrapped as the taxation on investment bonds is not as favourable as either of those.   So, they would probably have to missell it or use some pointless trust arrangement to justify it.

The prufund side of it is irrelevant.  There are far better investment bonds than the Pru offering.  Pru is the only one that offers the prufund though.