Accumulating Pension Credit - Capital reassessment?

Sea_Shell

Thanks everyone.

Just to add, thankfully I've never had to have any dealings personally with the benefits system, and so this is a learning curve for me, in trying to help someone.   I don't want to be complicit in any way to any wrong doing.    I didn't even know about the £10k savings threshold before yesterday.

It doesn't take much to accumulate £10,000 over 15+ years, if someone has always been frugal.   Only about £13 a week.

It just seems a shame if they are subsequently punished for having saved rather than spent.   It was all income at one point, never 'capital' IYSWIM.

I'll let them know to loosen the purse strings!!    (for those who know me, that's the pot calling the kettle black!! )



ETA - This has kept me awake most of the night, and now I'm worried that they might be slightly above £10k.   

Am I right in thinking that if they are say £2500 over, then, if declared, they would be deducted £5 per week, from the PC, until it reduces back under £10k, BUT they can't do anything that might be seen as DoA to BRING it back under £10k.  

If it's been over for say 2 years (I'm thinking out loud here), then they could potentially owe £520 on top of having the PC reduced.   Is that right.   


ETAA - Would it be prudently imprudent in the current higher interest climate NOT to move their savings to a higher interest paying account, in case the extra interest takes them over (or further over!) £10k.     I'm assuming it's not DoA if you don't actively seek to maximise your interest!! ?

poppy12345

Sea_Shell said:

Am I right in thinking that if they are say £2500 over, then, if declared, they would be deducted £5 per week, from the PC, until it reduces back under £10k, BUT they can't do anything that might be seen as DoA to BRING it back under £10k.  

Yes, £5/week. There's no definition of deprivation of capital. Providing you don't just give away your savings. (to get them under £10k.)

Sea_Shell said:

If it's been over for say 2 years (I'm thinking out loud here), then they could potentially owe £520 on top of having the PC reduced.   Is that right.   

Yes £520 for 2 years. They can also just pay it all back from their savings and then their PC won't need to be reduced.

Sea_Shell said:

ETAA - Would it be prudently imprudent in the current higher interest climate NOT to move their savings to a higher interest paying account, in case the extra interest takes them over (or further over!) £10k.     I'm assuming it's not DoA if you don't actively seek to maximise your interest!! ?

That's correct. If they do have more than the savings limit then they will need to contact PC to report the changes.

kaMelo

Sea_Shell said:

Thanks everyone.


It doesn't take much to accumulate £10,000 over 15+ years, if someone has always been frugal.   Only about £13 a week.

It just seems a shame if they are subsequently punished for having saved rather than spent.   It was all income at one point, never 'capital' IYSWIM.

It's recognised that people who have been prudent through their lives should have some benefit of that prudency in comparison to someone who blew every penny they ever earned, and they do. The savings disregard is higher and subsequent deductions for excess savings are far lower when compared to UC for example.  Savings of £16,250 would end a UC claim whereas it results in only a £12 per week deduction for pension credit.  
People have differing views on whether there should be any deduction at all but it is a means tested benefit and means tested benefits have always (with the exception of Tax Credits) taken savings into account and I would think most people agree they should. The only debate really is about where those limits are set and what the rate of reduction is, that's a political decision.

Sea_Shell said:

I'll let them know to loosen the purse strings!!    (for those who know me, that's the pot calling the kettle black!! )

Absolutely, if there is something they want or need or makes their life easier then spend the money. Having been prudent means they have choices, they should enjoy them. 

Sea_Shell said:

ETAA - Would it be prudently imprudent in the current higher interest climate NOT to move their savings to a higher interest paying account, in case the extra interest takes them over (or further over!) £10k.     I'm assuming it's not DoA if you don't actively seek to maximise your interest!! ?

Whilst I don't see how it could be considered deprivation I would disagree with taking this approach. The deductions for savings in excess of £10,000 equate to 0.2%, I think you would agree that 99.8% of something is better than 100% of nothing.
The only caveat would be if the deduction was large enough to lose PC completely..

HillStreetBlues

poppy12345 said:

The rules are no different for those claiming PC to any other means tested benefits. Other than the savings limit difference.

There is also the difference on how income on excess capital worked out.
£1 a week every £500 or part of on PC , it's every £250 with other benefits,

So the rules are actually "fairer" for those on PC.

HillStreetBlues

Sea_Shell said:

Am I right in thinking that if they are say £2500 over, then, if declared, they would be deducted £5 per week, from the PC, until it reduces back under £10k, BUT they can't do anything that might be seen as DoA to BRING it back under £10k.  

It depends on what you mean by over.

If they have £12500  they would not be £2500 over as some of that money would be income.

So would be £12500 minus the pension income for that period that equals the capital.

Also AFAIK  any cost of living payments aren't included as capital  so can also be deducted.

Sea_Shell

poppy12345 said:

That's correct. If they do have more than the savings limit then they will need to contact PC to report the changes.

I'm starting to wish they'd never  involved me☹️

nannytone_2

Means tested benefits are awarded based on need.  When spending other peoples money , its important to ensure they don't have  more money
Than the people they expect to support them

Murphybear

Ive read this thread with interest.  I live in sheltered housing.  There are 33 of us (individual flats with communal areas) and many don’t use a computer or internet.  I’m helping someone who can’t get his head around the fact that when he takes a small pension before his 75th birthday in a few months it will take him over the savings limit for his housing benefit and it will be reduced.  

Out of interest I did some research a while ago and found out that the U.K. is actually very generous in the savings it allows people to have and still claim benefits.  Some countries won’t give people any benefits until their savings are virtually zero.  

Sea_Shell

kaMelo said:

Whilst I don't see how it could be considered deprivation I would disagree with taking this approach. The deductions for savings in excess of £10,000 equate to 0.2%, I think you would agree that 99.8% of something is better than 100% of nothing.
The only caveat would be if the deduction was large enough to lose PC completely..

Assuming they will start to SPEND the extra interest that they earn, then I can see that earning max interest IS in their best interests.   

Sea_Shell

Another thought...

What if the various Cost of Living payments take you over £10k (or further over)?

How are these split out from your "capital"?    Can they just be deducted?

If so, I've lost track of how much they might have been (so far) over the last couple of years, to be able to deduct them.

Anyone got a list?   For someone on PC/PIP and historic DLA.

Not sure how well they will have kept records ☹️ or how they'll show on statements (outside of energy bills/council tax etc)

Thanks.