To wonder why the UC savings threshold is £6,000?

[GiddyLurker]

Why is the Universal Credit savings threshold set at £6,000? What’s the reasoning behind that number?

It feels quite specific and I just wondered whether there’s a particular logic or policy decision behind it?

There is currently the lifetime ISA which you can use for a house deposit (if you've never owned a property) or retirement. There are penalties for accessing for any other reason. I think this should be treated like a pension and not included in UC calculations.

Right, so you’re not talking about people who are likely claiming benefits.
Yes, people who are earning a reasonable wage should save. How is that relevant to the thread? You were bashing people who piss it all up the wall.

just focussing on the working part- where do you get your stats from?

when I looked it up last night it said about 35% people on UC are in work and about 10% are full time.

I genuinely am interested as I keep hearing this line that most people who are on UC are in work but can’t find any evidence that is the case.

editing to add- i think this is important in this debate as I think we are often comparing apples and oranges regarding people’s situations and how the government should cater to help

On the old Working tax credit/Child tax credit system the actual amount of savings didn’t matter. It was the amount of interest you got from savings that was added to your annual earnings. The £6k amount was introduced for universal credit and tampered down until £16k. People who were moved over had some protection.

How is that relevant ? Entitlement to PIP means you have additional costs due to disability, so it would be spent on that.

No it doesn’t. The assessment is about the impact of the disability, not extra costs incurred because of it. I spend £££ on my disability but I can’t imagine it would be eligible for PIP as with intensive medication etc I live a fairly normal life.

And then you would turn to UC. Of course people with £6k should have to live off it before the taxpayer pays.
however if you have been working you would get new style JSA for the first 6 months which is non means tested.

If someone manages to save for a house deposit while claiming UC, how do they then pay the mortgage? If people are relying on UC to help pay their rent and bills in what way will having a mortgage save money in the long run?

I also have an issue with posters referring to benefits as ‘free handouts’ when they are provided as part of the social contract. When you are working you pay into the system to provide a safety net for when/if you need it. Expecting people to wipe out their savings before they can claim is counter productive as it removes any safety net for emergencies, thus reducing them to reliance on the state for everything.

It would save money for the state because there is no financial help available via benefits to pay a mortgage.

But the ‘social contract’ involves giving back
and working.

We have far too many people not working who should be working. They think the ‘contract’ just means taking and being provided with things, and forget they need to reciprocate

Sorry poor use of word. I didn't mean gifted. I meant supported.

Then their UC will stop and they live off their savings for a bit, or they use the money to treat themselves before it pushes over the savings limit?

I have a friend who got made redundant last year, no fault of her own..she had savings over the threshold and it took her a long time to get a job. During her unemployment she went on a couple of nice holidays, bought some new furniture etc and I really don't blame her as she was doing it to get her savings under the threshold. The system really does penalise/ disincentivise those who try to stand on their own 2 feet

I understand that there’s no help with mortgage payments but if people are already relying on UC to pay rent how are they all of a sudden able to pay a mortgage when they didn’t have money for rent?

I'm not on UC but I def think the threshold should be raised without a doubt. A decent costs 10 grand ...TVs anything that needs replaced...

But your friend wasn’t standing on her own two feet, if she was she would of not depreciated her savings in order to get money from the government, if she were to be standing on her own two feet she’d of been sensible with her savings to pay living costs etc whilst she found new employment

People who have worked and paid into the system have also paid for the benefits they claim - many people on UC are also working. A starting position of zero allowance for savings is totally unworkable because every time a claimant was paid they would be over the threshold and UC would stop.

The £6k threshold was based on one year at minimum wage in the nineties - that was judged an adequate amount in reserve to be able to cope with unexpected life events and emergencies without having to further rely on the state. It has never increased. If it had kept pace, based on a forty hour week it would now be in the region of £26k.

A decent what?

There is nothing immoral about debt.

The only problem is being so deeply in debt that you can’t pay things off.

If you can save £4k (the remaining £2k being to cover next month’s rent and bills) to pay for a new car you can make a down payment and put the rest on finance. Now, instead of saving, you’ll be paying off the finance. I sold my perfectly fine car for £4k last year so it’s entirely possible.

I also do not think people on benefits paid for by the working people of this country should be able to build up savings for holidays and home improvements. Benefits should keep you just above the poverty threshold, and no higher. If we hadn’t dismantled our bus network people wouldn’t need cars. We would be better off with lots of buses creating jobs for bus drivers, rather than loads of people trying to save their benefits to buy cars.

I personally think the UCthreshold should £7k, which is 3x the average monthly take-home pay, as my mum said you should always have about 3 months’ pay in the bank as a buffer in case you lose your job.

They go through your accounts with a fine toothed comb to check you haven't done something like this.

I’m always sceptical of ‘l have a friend’ posts like this. UC would have questioned large amounts being withdrawn from bank accounts - things like holidays and expensive non essential items because would have been viewed as deprivation of assets in order to claim benefits.

@OttersOnAPlane a decent car does not cost £10k. And why should someone on benefits feel entitled to afford a decent car? Many old cars with high mileage are absolutely fine these days, not like when I was young and you’d find the floor had rusted into holes and the engine was knackered.

Surely bank stateless are checked to see if you have intentionally deprived yourself of assets.

She was unemployed over a year an must have got away with it..they even knew she was going on holiday.

Her bank statements were checked as part of the initial claim yes but not ongoing