benefit means testing for savings

A question about : benefit means testing for savings

Maybe a question for a different forum but I'm new here so here goes:
My company are planning redundancies so I'm planning the worst. How soon do the benefits office start asking about savings & how far back do they dig? Do endowment policies(non-mortgage linked) count as savings? It has a life insurance aspect to it.
If, after redundancy, I were to use savings for home improvements whilst on contibution JSA, could I be judged as depriving myself by reducing savings, & thereby jeopardising benefits?

Best answers:

• Cont JSA is paid for 6 months if you have enough NI contributions and doesn't take any savings into account so you don't need to worry at the minute.
  If after 6 months you go onto Income based JSA, this will depend on any household income - ie partners wages etc, then savings will be counted. Anything under Ј6000 ignored and a tarrif income of Ј1 for every Ј250 over Ј6000 up to Ј16000. Over Ј16k and no benefit is payable.
  Endownment policies may count as savings but thats up to the decision maker.
• I'll be interested to see the answer to this myself - as I often wonder whether I could spend any savings I have myself during that initial 6 months of unemployment (ie when I would be on contributions-based benefits, rather than the subsequent means-tested benefits).
  I do recall the comment from cw18 the other day that when the DWP says "savings" they mean literally every single penny you have to your name (even down to the cash in your purse or wallet). I guess thats why they call it a "capital" limit of Ј6,000 - rather than a "savings" limit of that figure. If someone asked me how much I have in the way of savings - the truthful answer would be "nothing". "Capital" on the other hand - say Ј40 in my purse, a couple of hundred pounds of Ј2 coins, a bit in Euros that I have kept from my last holiday (rather than lose money changing it to and from one currency to another) and some money set aside and reserved in my bank account for paying bills. But I truthfully dont have any savings. So - be careful on that point.
  In fact I sometimes whether the "clock starts counting" even when one is under notice of redundancy - but I would imagine one can spend ones income freely whilst actually still serving out a notice period - after all, at that point, you dont know whether that job loss is actually going to cause you to be unemployed as a result or no (you might get another job literally the next day and never have to claim benefit).
• I see Jules and I cross-posted.
  So - thats some clarification. What I am wondering is whether the DWP asks for recent bank statements - ie would ask at month 7 for the last however-many-months-worth of bank statements. I had the vague idea from somewhere that they ask for the last 4 months worth??????
  So - wondering whether one needs to spend any redundancy money in the first 2 months of unemployment - and then give them those bank statements for the months 3 onwards if one is unemployed long enough to end up on means-tested benefits?
  I would also be interested to know where the D.W.P. expects one to "store" any savings over and above £6,000 in order to receive the rate of interest on them that they say you will be getting? I'd like to put my money in that place myself - as its likely to be higher interest than anywhere I can find (errrr...that was said a bit tongue in cheek - but, seriously, I would be interested).
  EDIT: hMM.....thinking about it further.....that "tariff income" of £1 per £250 saved. Does that mean that they have lowered the rate of interest they expect people to be getting on their savings to a more realistic one than it used to be? Am I correct in interpreting that as meaning that they assume one gets £1 interest per year on each £250 saved over £6,000? (ie £1,000 "surplus" savings would be presumed to be getting £4 p.a. interest - if my maths is correct that would make it 0.4% interest rate they assume you are getting)?
• I don't know about the bank statements but the now have full access to bank accounts via their computer systems so I don't think it would matter when the money was spent they would see it! This was one of the reasons I didn't sign on when I was made redundant I didn't fancy them looking through my accounts.
  I remember years ago when my MIL was on Income Support, each year she was called in with a years worth of bank statements and they went through each transaction, I thought this was awful but its worse now they can look when they feel like it.
  If you pay off any debts ie credit cards, loans, mortgage etc then this is discounted, you are allowed to spend it on debts. If you can show the spend was necessary then there shouldn't be a problem but it will depend on the individual decision maker. Keep receipts and be prepared to justify every spend.
  The tariff income is on a weekly basis so you lose Ј4 benefit each week for every Ј1000 savings over Ј6000 up to Ј16000 then you lose it all.
• Can they access any bank account or just those of people claiming benefit ?
• My head hurts now - as I'm a bit "dyslexic" at maths. So Ј4 assumed interest per WEEK on Ј1,000 would mean they assume one is getting Ј208 interest per YEAR on each Ј1,000? - ie an interest rate of somewheres around 20%?
  Have I got that right? Is it really Ј4 per WEEK? Now I seriously want to know where one can get that rate of interest..... ..not to mention enough extra to allow for the necessary inflation interest one needs on savings for them just to keep pace.
  I know they were assuming a wildly unrealistic rate of interest on "surplus" savings a while back - but this looks they have gone into the realms of Cloud Cuckoo Land....
  If one receives, say, Ј8,000 redundancy payoff - then what is the best thing to do about that "surplus" Ј2,000? It looks as if one would be losing some of the basic Ј60.50 benefit per week by them taking off you WAY more in interest than you were actually getting on that Ј2,000 and thus your benefit income wouldnt even reach the lowly figure of that Ј60.50 per week.....??????? Presumably that cant be the case - can it?
• Hi ceridwen
  It's not that they see it as interest but as income. They expect you to use Ј4 per Ј1000 of your savings as income per week, nothing to do with interest.
  For someone made redundant it wouldn't apply for the 1st 6 months if they were claiming cont based JSA but after 6 months it would.
  Ј8,000 savings and they would lose Ј8 per week from their benefit. They would be expected to take this Ј8 from their savings.
  As the savings reduce so will the tariff income.
• For JSA purposes, for those under 60, the assumed income from capital is Ј1 per week for each Ј250 or part thereof on the amount above Ј6000, basically 20% gross interest.
  Of course, the government knows that it is not possible to achieve this rate on savings - but remember that the interest on the first Ј6000 have not been taken into account. For someone who had Ј7000 of capital, they could fairly easily be getting 3% gross (= Ј4/week) so not unrealistic when taken together. And, of course, you would need to use that "excess" capital in order to substitute for the loss of benefits. After all part of the reason for saving is to provide for "a rainy day" - and being unemployed is such a time.
• Well just take out a set sum from your bank, every week of that first spell of unemployment, and if quizzed then tell them you needed that to live on cos their rates of benefit are too low. Then shove it under the mattress !
• See what you mean. I'm thinking basically from my own position here I guess - ie childless. Basically the system seems to have been constructed that someone who is childless and owns their own home soon finds themselves in the position of getting literally nothing (assuming a reasonable level redundancy payout). I know about the bit about not getting any benefit if one has over Ј16k savings - didnt realise one still gets child benefit stuff. I dont have any children - so I wouldnt have any of that. Didnt realise one is expected to pay Council Tax still - even if there is no income at all coming in if one is in that Ј16k plus savings situation. I see that housing benefit gets paid to people in rented accommodation - again, doesnt apply.
  So - if I had Ј16k savings - all I would have in the way of income would be free prescriptions then...no Council Tax covered - that would be it Ј7.20 once in a while if I needed a prescription. Dentist - not applicable - as mine is private. Not a lotta income then - that Ј7.20 once in a blue moon.
• So.......your advice?
• Thanks to all who have posted, as this has been a very interesting and enlightening thread.
  My position is not currently under threat, but with the way the economy is going, i'm wanting to have all my bases covered.
  I understand for the first six months it's not dependent on savings, but from then on it is. That's why I'm wondering whether it's best to act now before redundancy comes a knockin'.
  I get the impression that if I use some of my savings to pay off a chunk of my mortgage that's fine and not classed as "deprivation of capital" ?.
  However, does money I have in Shares (and premium bonds) count as capital ?
• Hi,
  Please be kind to a newbie !
  I've got an insurance policy (iProtect) which pays out Ј1000 a month should I get made redundant (upto 12 months). I presume this will affect any benefits I'd be entitled to ?
  Will this affect any benefits after 6 months (when it's means tested) or straight away ?
  Frank
  PS! How does council tax benefit work ?