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Your Savings and Benefits

By: Paul Geraghty - Updated: 12 Oct 2017 | comments*Discuss
 
Your Savings And Benefits

In the old days people had to fend for themselves, and would put money away in the good times so they could cope with the bad times. Today, the government provides a safety net for everyone, making a stock of savings less of a necessity than it was before. Some people still do accumulate significant savings, though. So will your eligibility for benefits be affected if you are one of those?

It seems rather paradoxical that those who have acted responsibly by building up a stock of savings to help them cope with adversity are penalised for doing so by the government. That is how it is, however. Your savings do affect your eligibility to receive some government benefits, potentially either reducing the amount you get or even meaning that you will get nothing whatsoever.

For those who have just been made redundant, this is an especially important issue because, in most cases, you will have received a lump sum redundancy payment. Sometimes, this can be a very large amount. Up to £30,000 can be paid free of tax, but if you just retain it, it will affect your eligibility for some state benefits.

Benefits Which are Affected By Your Savings

If you’ve just been made redundant, unless you have a new job lined up, you will naturally want to claim Jobseeker’s Allowance. There are two forms of Jobseeker’s Allowance : contribution-based and income-based.

Contribution-based Jobseeker’s Allowance is only available to those who have made enough national insurance contributions and is only payable for six months. It does not take account of your level of savings. Income-based Jobseeker’s Allowance does take your savings into account when determining you eligibility. It is not time-limited. Both contribution-based and income-based Jobseeker’s Allowance can be claimed at the same time.

The main state benefits which take savings into account when determining eligibility include income-based Jobseeker’s Allowance, Council Tax Benefit, Income Support and Housing Benefit.

How the Amount of Your Savings Affects Your Eligibility for State Benefits

For those benefits which are affected by savings, the basic rule is that if you have savings above the upper savings limit, which is currently £16,000, you will not be eligible to receive any benefit. If you have savings below the lower savings limit, currently £6000, your benefits will be unaffected. (Note that these values can change over time, so you will need to check for the latest values.)

For savings in between the two limits, your savings are assumed to yield a weekly “tariff income” of £1 for every £250 of savings. This equates to an assumed annual tariff income of approximately £50 for every £250 of savings, equivalent to an interest rate of 20%, which is clearly absurd and unattainable in the real world. Nonetheless, this is the basis the government uses for their calculations. The benefit payments you receive each week will be reduced by your assumed tariff income. So, if the lower limit is £6000, and you have £10,000 saved, £4000 of that will be counted. £4000 divided by 250 is 16, so you will get £16 less per week in benefits.

Savings and Benefits – Conclusion

When you’re made redundant, the payment you get from your employer is the silver lining to the cloud. Just be aware that, when it comes to Applying for Benefits, the silver lining may have a whole new cloud of its own.

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[Add a Comment]
Miggs - Your Question:
My wife is on DLA , I'm on pension credits how much our we allowed to have in our current account

Our Response:
You can find out the answer to your question via the benefits calculators here.
RedundancyExpert - 12-Oct-17 @ 3:03 PM
My wife is on DLA , I'm on pension credits how much our we allowed to have in our current account
Miggs - 12-Oct-17 @ 9:18 AM
Husband has a retirement account can this affect my income support?
Nelly - 11-Oct-17 @ 2:56 PM
James- Your Question:
I have a question, I recently was given £1000 as a present from my nan. I put it into my bank, will the job centre deduct this from my money?

Our Response:
Much depends upon what benefits you are on and whether this takes you into having savings of over £16,000. If it doesn't, then the Job Centre should not penalise you.
RedundancyExpert - 3-Oct-17 @ 12:24 PM
I have a question, I recently was given £1000 as a present from my nan. I put it into my bank, will the job centre deduct this from my money?
James - 2-Oct-17 @ 6:32 PM
Jules - Your Question:
Can you. Have different banks befoe it affects beniits

Our Response:
No, your savings are pooled together and assessed as a single amount.
RedundancyExpert - 2-Oct-17 @ 12:32 PM
Can you.. Have differentbanks befoe it affects beniits
Jules - 30-Sep-17 @ 1:46 PM
Hi. I have a problem I'd like help with. My sister is 58 deaf and mentally challenged since birth , she worked in a government place ment job for 23 years. She was made redundant with about £28000 redundant payment. She claimed benefits having paid nat ins contributions and was interviewed and put in a support group. I'm having problems on her. behalf with dwp , Is it correct that having paid enough. At ins stamps and put into a support group due to her disabilities her savings are not liable to means testing. Please help having sleepless nights due to dwp s failure to answer my enquires.Help please or at least guidance. She has also become a carer for her bedridden mother and receives carers allowance. Thanks any advice or help most grateful
Bp - 18-Sep-17 @ 8:34 PM
The Cat - Your Question:
Iam 60 years old been self employed all my life. Payed all income tax every year on time and in full. Payed both N.I. by direct debit. Never claimed any thing. Through I'll health my wife and I are going to down size and buy smaller property. This should give me about £ 50 000. In the bank. I have no pension. If I cant work can I claim any benefits

Our Response:
You can see what benefits you may be entitled to via the Turn2Us link here .
RedundancyExpert - 8-Sep-17 @ 2:35 PM
Iam 60 years old been self employed all my life. Payed all income tax every year on time and in full. Payed both N.I. by direct debit. Never claimed any thing. Through I'll health my wife and I are going to down size and buy smaller property. This should give me about £ 50 000. In the bank. I have no pension. If i cant work can i claim any benefits
The Cat - 8-Sep-17 @ 9:01 AM
Hi all just a quick question I have just got a bit of pension money and I want to take 9.000 pounds out of it how much will they deduct weekly of me I'm on esa and 6.950 is a tax free lump sum any help please would be much appreciatedthanks
maddog195658 - 6-Sep-17 @ 11:01 PM
BabyBlog - Your Question:
I've recently been left £16,000 for a house, in my grandma's will when she passed away. I am currently pregnant, therefore I am not going back to college this year (I'm 19 years of age) and for obvious reasons can not get a job. Is there anything I can claim for now until I can get back into college or a job?

Our Response:
You can see more via the link here which tells you, you can apply for universal credit if you do not have savings of over £16,000 or more.
RedundancyExpert - 29-Aug-17 @ 3:16 PM
I've recently been left £16,000 for a house,in my grandma's will when she passed away. I am currently pregnant, therefore I am not going back to college this year (I'm 19 years of age) and for obvious reasons can not get a job. Is there anything I can claim for now until I can get back into college or a job?
BabyBlog - 28-Aug-17 @ 8:07 PM
Hi, I went into early retirement due to my disability. I am receiving ESA and housing benefits. If I take 10k lum sum pension money how that will affect my benefits and for how long?
Umar - 22-Aug-17 @ 3:19 PM
Mrs - Your Question:
I'm utterly confused. I lost my job once month ago. I've been told I'm not entitled to any benefits as I have savings of £8k in the bank and my partner has savings upwards of £20k. I've worked non stop for the last 21 years. Can I claim anything at all?

Our Response:
You may be able to claim Jobseekers Allowance if you have paid National Insurance for the past two years and you are searching for another job, please see link here.
RedundancyExpert - 31-Jul-17 @ 11:48 AM
I'm utterly confused. I lost my job once month ago. I've been told I'm not entitled to any benefits as I have savings of £8k in the bank and my partner has savings upwards of £20k. I've worked non stop for the last 21 years. Can I claim anything at all?
Mrs - 28-Jul-17 @ 4:22 PM
Nat - Your Question:
I have recently been made redundant. I am on part benefits as a single parent working 16hrs a week. With redundancy, holiday pay and bonuses it will amount to about £2,000. Does this amount effect my benefits in any way. Thank you.

Our Response:
You can see more via the Turn2Us link here which will hopefully answer your question.
RedundancyExpert - 25-Jul-17 @ 11:02 AM
I have recently been made redundant. I am on part benefits as a single parent working 16hrs a week. With redundancy,holiday pay and bonuses it will amount to about £2,000.Does this amount effect my benefits in any way. Thank you.
Nat - 24-Jul-17 @ 10:21 AM
Forthy - Your Question:
My father is 58, he was medically retired last year. He gets Esa. He is thinking about selling his house, he is going to help us financially and put rest into savings or isa. How much can he keep in his own account for his esa to continue and can he have an isa in his own name?

Our Response:
You can see more via the Age UK link here which should tell you all you need to know.
RedundancyExpert - 11-Jul-17 @ 2:40 PM
My father is 58, he was medically retired last year. He gets Esa. He is thinking about selling his house, he is going to help us financially and put rest into savings or isa. How much can he keep in his own account for his esa to continue and can he have an isa in his own name?
Forthy - 11-Jul-17 @ 1:38 PM
Darren T - Your Question:
Hi my dad is turning 60 this year and has had a letter from a previous employer years ago about his pension. If he was to take the lump sum payment of 13,000 what would happen to his benifits. He doesn't claim anything but my mother receives income support and that's what they live on. Would their benifits be affected?

Our Response:
You can see more via the gov.uk link here which will give you more information.
RedundancyExpert - 3-Jul-17 @ 11:49 AM
I think these welfare rules are quite too tough,, i lvied in the3 world and seems similar or owrse over there but these UK welfare rules of 6000 £ will only help those are the bottom,, indeed, but once the person is relativily well, they loose rights, we ned more jobs and less burocracy if we want to help eveyr one who needs,, poor people will never be able to buy a small flat.. and never be able to do buzemss..
tuti - 3-Jul-17 @ 11:02 AM
Hi my dad is turning 60 this year and has had a letter from a previous employer years ago about his pension. If he was to take the lump sum payment of 13,000 what would happen to his benifits. He doesn't claim anything but my mother receives income support and that's what they live on. Would their benifits be affected?
Darren T - 2-Jul-17 @ 6:33 PM
Trev - Your Question:
My wife works 16hr I am out of work due to being a carer for my mum who past away. She has left me 30.000 will this affect my housing benifit as I want to put 15.000 in a pension as I dont have one and pay a few bills of my rent is 1000 pm so the money wont ladt long

Our Response:
Yes, this is likely to affect your means-tested benefits. Deliberate deprivation occurs when an individual transfers an asset out of his or her possession to put himself or herself in a better position when claiming particular benefits. If you are found to have deliberately deprived yourself of capital and assets you will be treated as having “'notional capital'” to the value of the capital you disposed of.
RedundancyExpert - 13-Jun-17 @ 1:00 PM
My wife works 16hr i am out of work due to being a carer for my mum who past away. She has left me 30.000 will this affect my housing benifit as i want to put 15.000 in a pension as i dont have one and pay a few bills of my rent is 1000 pm so the money wont ladt long
Trev - 6-Jun-17 @ 7:52 AM
My husband got a lump sum plus arrears from a mine workers pension he wasnt expecting, the total was £21000, as he wasnt expecting this he gave early inheritance to grandchildren, totaling £20,000 went to council and was told as he gave it away it is still classed as our money !!! but if he spent it on a car it would have been ok !! although I am waiting for them to assess us I have been reading we will have to pay full rent. I cant really ask for the monies back, if after around 6 months we are struggling can I apply for housing benefit again. I am 70 husband ( disabled) 65. Thankyou
Chezza - 3-Jun-17 @ 9:58 AM
Denise Allen - Your Question:
HI I've just had to put a claim in for income based jsa after my national insurance based jsa finished I'm claiming just for my self as my husband has a private pension does any one know how long you must wait to hear from them please

Our Response:
You would need to contact Jobcentre Plus directly, as we have no knowledge of its administrative procedures and/or how long a claim may take.
RedundancyExpert - 24-May-17 @ 10:42 AM
HI I've just had to put a claim in for income based jsa after my national insurance based jsa finished I'm claiming just for my self as my husband has a private pension does any one know how long you must wait to hear from them please
Denise - 23-May-17 @ 2:04 PM
Hi: My husband received a £6000 pension pot two years ago. That was used to pay debts and purchase a car. Two years later, I am considering taking a lump sum pension pot of my own of £8000. We are and have been in receipt of Housing Benefit for three years due to my husbands disability. My question is, will Housing Benefit say I have £8000 capital which is permitted or will they add the two sums together is 6000+8000=£14000. Even though the first sum is long gone and was two years ago. I cant decide whether to take mypension pot or not. We are hoping to downsize to a Council Bungalow soon and I wanted it to fund the move, soft furnishings etc.
kaz - 23-May-17 @ 7:06 AM
I have just been accepted for a 1 bedroom flat, I'm currently getting ESA (support) I will be getting full housing benefit etc, I have just under £6000 in my account, now the housing officer has told me my ESA is going to be affected and I'm going to be losing money every week, I'm confused I just want to know where I stand, do I lose money each week or not?? Thank you
Bella - 11-May-17 @ 7:06 PM
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