Jobseeker's Allowance, Savings and Means Tested Benefits

So, I was looking at the DWP brochure on Jobseeker's Allowance and, if I'm reading it correctly, it seems that you are not entitled to Jobseeker's Allowance if you lose your job but have at least £16k in savings.  Is this true? It doesn't seem fair to be denied it if you have been paying NI contributions, and it is a disincentive against trying to earn more and save more money, but then again, that's the problem with all means tested benefits.

Regarding all means tested benefits where savings are counted - I know, for example, that they are counted against long term care benefits - are savings outside the UK counted? For example, if you have very low income (below the eligibility limit), no money in UK bank accounts, but money in an account outside the UK that would bring you over the limit, would you be able to get the benefit? If so, this might affect some people's decisions around whether to keep savings in the US or the UK.

So, I was looking at the DWP brochure on Jobseeker's Allowance and, if I'm reading it correctly, it seems that you are not entitled to Jobseeker's Allowance if you lose your job but have at least £16k in savings.  Is this true? It doesn't seem fair to be denied it if you have been paying NI contributions, and it is a disincentive against trying to earn more and save more money, but then again, that's the problem with all means tested benefits.

There are two types of JSA:  contribution-based and income-based.  But, in most instances of means-tested benefits, yes, if you have over £16K in savings you are ineligible because benefits are designed as a safety net when you have nothing, not to safeguard someone's savings.

I'd call and ask about the abroad savings, because I'd hate to answer 'no' when a) it isn't true b) it's a criminal offense to be anything less than 100% truthful to the best of your abilities on those forms, EVERY one of them makes that very clear, especially when/if I were not a citizen or a probationary citizen.

For me, that £60/week or so would not be worth potentially jeopardising my life in the UK.

FYI, this is only hypothetical.

I agree about it not being worth it to jeopardise your right to live in the UK. On the other hand, I know at least one instance of someone losing their life savings to pay for long term care (in the US, but the rules for England and Wales are similar) because having money in the bank in their own name meant they weren't eligible for the state to pay for LTC. If they had made other arrangements, such as giving the money to a relative in advance, it would not have been lost.

I didn't understand the difference between contribution-based and income-based JSA. The amount of money you get under either appear to be exactly the same, regardless of how much you have paid in NI.

I agree about it not being worth it to jeopardise your right to live in the UK. On the other hand, I know at least one instance of someone losing their life savings to pay for long term care (in the US, but the rules for England and Wales are similar) because having money in the bank in their own name meant they weren't eligible for the state to pay for LTC. If they had made other arrangements, such as giving the money to a relative in advance, it would not have been lost.

Giving your money or property or other assets away in other to qualify for benefits in some cases could be considered 'willful deprivation of capital' by HMRC or by the DWP and they maintain the right to refuse benefits if they find this to have occurred.  It needs to be done very carefully in order to avoid such a scenario.

Income-based JSA is for people who do not have enough or enough current NI contributions to qualify for contribution-based JSA, such as lone parents being moved onto JSA from Income Support.  Additionally, people who are on contribution-based JSA are less likely to be eligible for other means-tested benefits such as council-tax benefit or Sure Start grants.

Giving your money or property or other assets away in other to qualify for benefits in some cases could be considered 'willful deprivation of capital' by HMRC or by the DWP and they maintain the right to refuse benefits if they find this to have occurred.  It needs to be done very carefully in order to avoid such a scenario.

I'm aware that it would have to be done very carefully. I have personal experience of someone doing this in the US (done with the advice of an attorney).

Am I right in that the amount of JSA for both income-based and contribution-based that you would receive is exactly the same; other benefits notwithstanding? And does the £16k savings limit apply to contribution-based? It appears that it does, but I may have mis-read.

Am I right in that the amount of JSA for both income-based and contribution-based that you would receive is exactly the same; other benefits notwithstanding? And does the £16k savings limit apply to contribution-based? It appears that it does, but I may have mis-read.

I'm not entirely sure if it's exactly the same, because all my information and research is a result of helping out DH's sister, who moved from Income Support to JSA and therefore has income-based.  She is also a parent with joint custody of two sons, one of whom is disabled so she qualifies for more support on this basis. 

On the other hand, I know at least one instance of someone losing their life savings to pay for long term care (in the US, but the rules for England and Wales are similar) because having money in the bank in their own name meant they weren't eligible for the state to pay for LTC. If they had made other arrangements, such as giving the money to a relative in advance, it would not have been lost.

But that's only fair and right. That's what savings are for. I don't see why the state should pick up the tab just so the kids get an inheritance.

Anyway, care needed here! In the UK, giving money or property away to a relative (or anyone else) to avoid it being assessed as savings in connection with care charges or benefits is called "wilful divestment" and can result in the divested funds and/or property being treated as if it was still owned by the person concerned, who would be billed accordingly in the case of care provision (or have their benefit calculated accordingly).

I didn't understand the difference between contribution-based and income-based JSA. The amount of money you get under either appear to be exactly the same, regardless of how much you have paid in NI.

The difference is twofold:

1. You qualify for contribution based JSA if you paid a minimum number of NI contributions in the "contribution year" which is 2 years before the current one I think. If you do not qualify for contribution based JSA you can claim income-based JSA.

2. Contribution-based JSA is not means tested, so if you have savings or a partner who earns money these are not taken into account as they are with income based JSA. Contribution based JSA is payable for a total of 26 weeks after which you have to claim income based JSA.


 

But that's only fair and right. That's what savings are for. I don't see why the state should pick up the tab just so the kids get an inheritance.

Anyway, care needed here! In the UK, giving money or property away to a relative (or anyone else) to avoid it being assessed as savings in connection with care charges or benefits is called "wilful divestment" and can result in the divested funds and/or property being treated as if it was still owned by the person concerned, who would be billed accordingly in the case of care provision (or have their benefit calculated accordingly).

The difference is twofold:

1. You qualify for contribution based JSA if you paid a minimum number of NI contributions in the "contribution year" which is 2 years before the current one I think. If you do not qualify for contribution based JSA you can claim income-based JSA.

2. Contribution-based JSA is not means tested, so if you have savings or a partner who earns money these are not taken into account as they are with income based JSA. Contribution based JSA is payable for a total of 26 weeks after which you have to claim income based JSA.


 

Thanks. From what I read, it appeared that contribution-based JSA was also means-tested, which is why it seemed unfair. This seems fairer and made more sense. The problem was poorly worded literature.

Regarding fairness, is it fair that the state shouldn't pick up the tab if someone lived frugally, working hard, scrimping and saving and doing without their whole life, putting every extra penny that they didn't need for basic necessities into the bank,  but that the state should pick up the tab for someone who spent every penny they ever earned whenever they wanted to without even considering making any provision for the future? What is the incentive to work hard and save if in the end you will lose everything you have saved and be in the same position as someone who never saved anything? Can we blame people for living on credit and running up massive amounts of debt if we live in a society where in the long run, there is no reward for saving?

I've dealt with financial products for retirement as part of my job in the UK, and as I said, I have personal experinece with this in the US,  so I am aware that there are wrong ways and right ways (such as setting up a trust at the right time) to divest oneself of property.

What is the incentive to work hard and save if in the end you will lose everything you have saved and be in the same position as someone who never saved anything?

The incentive, I suppose, is the knowledge that you have been prudent and looked ahead to a time when you need extra care and made sure that you could pay for it. After all, you can't take it with you!