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?

sorry … still don’t understand!

But how does anyone have a buffer of savings for unforeseen eventualities to protect them from financial destitution - for say a new boiler or worse - new roof? Health costs that can’t be met on the BHS (no not cosmetic surgery). £6K doesn’t go v far. Losing any reliable income from benefits bcos you aren’t allowed to also insure yourself against financial insecurity - if you can’t work due to disability or health problems - seems unfair. But yes a line & a figure needs to be drawn. Perhaps it’s a calculation based on a percentage of income that is a generally accepted amount relative to income, that is considered the general rule to have as savings. Any more then suggests you can afford not to be economically dependent on the state. I don’t agree with those maths however.

Worth clarifying (if it hasn't been done so already) that the £6k isn't specifically "savings" - it is "total money across any and all bank accounts" - so this includes income that you will be spending to live on. So, practically speaking it really means you can only have "savings" of £6k minus your monthly expenses.

It's also very tricky for people who are self-employed and receive income on an inconsistent basis.

I think there should a savings limit but it should be adjusted based on family size and location. A single person with 6k savings is very different to a family in a high cost of living area.

@BooneyBeautiful very well put to echo a PP. Do you mind me asking as I did not know you could claim a full state pension early? But I’m not v clued up on this. Do you become eligible if you have a disability? Are there threats to this eligibility being disproved in the way that welfare reforms are trying to re-write eligibility for disability support? I hope you don’t mind me querying. I’m anti welfare reforms in the direction they’re going & pro improving quality of life & all other social metrics, amongst improving access to employment for disabled people in general. Something the government claim they’re doing but patently aren’t.

I can't disagree with you there! If you don't have any joy when you say you want to do this, it could be worth talking to the CAB, or similar, to check the situation with them.

A couple of websites I found, when I was checking just now, which may be helpful are:

https://contact.org.uk/about-contact/news-and-views/what-families-need-to-know-about-preparing-for-universal-credit/

and

https://www.gov.uk/national-insurance-credits/eligibility

Good luck!

If people can save (which it appears a lot can) then why can’t they save just below the allowance for emergencies?

I understand what your saying but if people can save which it appears a lot can because they’re complaining about having a limit on savings then why don’t people save just below the limit to allow for emergencies.

Where did I say people on UC don’t have jobs? My point was if they can’t afford rent without the benefits where is the money coming from to pay for the mortgage if they lose the housing payment. They still have to find money for it. If they could afford a shared ownership they still need to be able to afford a mortgage payment each month.
It would be hugely beneficial for the government to not have to pay people’s rent or portions of it I do agree

Thanks hope others pick up on this .I wouldn't want anyone put off because I posted wrong info.

UC doesn’t pay all of the rent, and sometimes the amount the tenant has to find to top that up is more than a mortgage would be. It’s not hard to see where the savings could be made with some changes to the system.

I'm pretty sure pensions are not included when calculating your total capital/ savings allowance for UC 🤔

Some posters are saying there should be no allowance at all. They are ignoring the fact that most benefit claimants wouldn’t be able to save anything like £6k - it’s mainly people who have worked and become unemployed - posters are expecting them to exhaust their savings before ‘the tax payer funds them’ forgetting that up to the point of them losing their jobs, they have been tax payers themselves and have paid in to the system they are now taking from.

The threshold of £6k was set in the early 1990’s if memory serves. Then the buffer represented a years’ salary at minimum wage and was deemed a fair sum to have in reserve for the unexpected, so that the burden on the state was less when these life events presented themselves.

In 2026, a comparable sum would be £26k as a year’s salary based on a forty hour week at minimum wage. The threshold for the buffer hasn’t moved for thirty years. The average house price was around £50k in the early 1990’s and it was possible to buy fixer uppers for around £25k. The cut off point of £16k was considered a huge sum in the 1990’s but everything is relative.

Depends on whether they have been accessed or not. If you have taken a lump sum from your pension pot that will be included in the calculation. Untouched pension pots are not included in the assessment. If you make regular, scheduled withdrawals (such as a regular annuity or income drawdown), these are treated as unearned income and deducted pound for pound from UC.

I don’t know how to make it any clearer.

This, which is why the posters advocating for zero allowance for ‘savings’ are proposing something that would be unworkable. For UC claimants who work, every time they received their salary they would be over the threshold and UC would stop. It’s ridiculous.

You’ve misunderstood, it’s not possible to claim state pension early, on grounds of disability or anything else. State pension age is fixed and rising. The poster became unable to work before she reached state pension age so would have had to claim any benefits she was entitled to before state pension kicked in.

No-one can claim state pension early.

As well as any lump sum taken being included in the calculation for the savings threshold, a private pension in payment would be classed as unearned income and would be deducted from benefit entitlement pound for pound.

Lucky you. I couldnt get credit. Neither can many others.

It's really common in my area to keep savings in cash to get around the savings thresholds. They miss out on interest but overall they're better off by being able to continue a claim. It means they can save for things like cars and paying for household repairs and appliances, though they wouldn't be able to save for a housing deposit as they wouldn't be able to pass AML checks. But we're in London so saving for a deposit would be unrealistic anyway.

Not everyone who gets PIP will qualify for the mobility allowance component at the higher rate, which is what you need for the notability scheme. And not everyone will qualify for boiler grant schemes as there are other eligibility conditions besides qualifying benefits. And of course those on UC are unlikely to be able to save those amounts - the point is that someone who has been in work and is now unemployed may very well have saved that much - why should they be asked to exhaust every penny of their savings before claiming benefits to which they have contributed whilst working ?

I've never said everyone working can and should save. Never.

I am saying that those of us that do save a small amount over many years (ie I've put away between £20 and £50 a month by being very careful and not doing all the things I could have done (ie 1 takeaway a month instead of 2), are the one's who are not entitled to any help when made redundant.
The money I have carefully saved to help my son (16) learn to drive and help with a deposit for a flat for uni, help through training or uni if he want to go) I am expected to spend it if I am made redundant- instead of helping my child, leaving them struggling to get on early in life too.

It makes me think I may have had the two takeaways and not bothered saving for my son.
It's a vicious circle and it needs to change.

I am not bashing anyone. I am saying it's ironic that someone on the exact wage as me but spent all their spare income on extra and treats, therefore didn't save, will be entitled to the full amount of help if made redundant.

Whereas I, who went a bit without to save for my sons driving lessons and first car, will not get any help.

It's like being penalised for being very careful.

You clearly don't know much about current living costs in the UK.

Rent, childcare and transport costs are very high in some parts of the country.