Made Redundant - Have PIP - Also over £16k In 3 Year Bond - Can I Get UC?

ThundyUK

Hi all,

Asking for a friend here being completely up front with you.

"I'm claiming PIP and am currently working, however as of the 31/07/24 I will be made redundant.

I have some savings, just over the £16k limit to claim universal credit. However, I cannot access this money as it's locked into a three year bond —— I thought my role was secure so I didn't really think about having money available in a liquid form, I was thinking more long term for the best rate of return overall…..

Given that UC rules state if you have £16k or more in your bank, you cannot claim anything does this rule me out from UC, even though I can't access my savings for another 19 months?"

Thanks all.

66Mustang

It has to be accessible

Is it possible to withdraw the money early, even if it means paying a penalty? Because I think they would have your friend do that, unfortunately

poppy123456

I agree with Mustang, they can actually access it but there's a penalty if they. UC will take into consideration the penalty, which would then reduce their capital. There's a deduction of £4.35/month for every £250 or part thereof over £6,000.

Have they looked at claiming New style ESA? This isn't means tested but whether they qualify for payments will depend on their NI contributions in tax years 2021/22 and 2022/23. https://www.gov.uk/guidance/new-style-employment-and-support-allowance (assuming their health condition limits their capability to work) otherwise they can look at New style JSA, which the same conditions apply for NI contributions. It's paid for 6 months.

ThundyUK

Thanks for the replies all, very helpful. Just confirming the details hence my late reply.

The redundancy pay is enough to settle outstanding debts, but then would be almost entirely reduced to zero should she want to go that route. Or could live from it till the lower limit is hit, then go on UC. Or does using it to do that cause problems too? As in, it's like she'd disposed of a size of capital that could have been "eked" out over time instead of reducing all credit card debt etc?

The money in the bond isn't accessible, no penalty option, it's just locked up tight. It's a bond rather than an ISA I think that's why- though I'm no expert.

I've told her about ESA - she's looking at that thank you.

Do the DWP not automatically check bank accounts by the way? I'm just wondering if she should disclose the bond up front, explaining it's inaccessible, or just wait it out & explain if it comes up rather than complicate things ahead of time?

Appreciate all the support.

poppy123456

For paying off debt see link and scroll to "notional Capital" number 50. https://www.legislation.gov.uk/uksi/2013/376/part/6

For the bond I've google and looked at several banks and some of them say that if circumstances change you can access the bond with a penalty. Others say if circumstances change you can access the money but you would need to close the account and there would be a penalty. They will need to speak to the bank they have the bond with.

DWP do not automatically check banks but they MUST report all capital/savings if they do start a claim for UC. If they don't report them then this could be seen as benefit fraud and they will almost certainly find out eventually. I found this link. https://www.moneysupermarket.com/savings/savings-bonds-guide/

• Thinking of dipping into your bond early? Be prepared for penalties, which can include charges or a loss of interest.

The most common lengths of bonds are one, two, three and five years, but you might be able to find both shorter and longer terms. The key is to ensure that you won't need the funds during the bond's term to avoid penalties.