ESA income related and savings over £6000

keira

A friend has £6000 in savings in their bank account but when they receive their ESA every 2 weeks or PIP every 4 weeks it takes them above the savings limit. They are really worried about this and wondering if anyone knows what the rules are about this.

Albus_Scope

Hi @keira thanks for getting in touch for your friend. We have some info here regarding savings, but your friend will lose out on a small amount of ESA if they have savings between £6k and £16k.

Every £250 over £6,000 counts as if you had £1 of weekly income.
For example, you claim income-related ESA and have £7,000 in savings.The first £6,000 is ignored.
Every £250 of the remaining £1,000 counts as £1 of weekly income.
This means £4 comes off your weekly ESA payment.

PIP is not affected by savings.

keira

Hi @Albus_Scope thanks for the reply. So are you saying that their benefit payments are classed as savings?

Albus_Scope

That's correct @Kiera any money in your bank will class as savings, unless expressly told by the DWP. So backpayments are usually not counted for a year.

keira

@Albus_Scope OMG Albus, they are going to be devastated. They have been receiving ESA (IR) and PIP for years so there is going to be a massive overpayment.

keira

@Albus_Scope Just to be clear Albus, their ESA and PIP are used to live on and pay bills etc, the money is not sitting in their account. It's just that when these payments are received it temporarily takes them over the savings limit. In view of this are you still saying that their benefits payments are classed as savings? This is so confusing!

Albus_Scope

That's correct, any money that goes into their account and is still there for the next payment cycle is classed as savings.

So if they had £5900 in the account as actual savings, then gets £150 benefit money, if that stays over £6k by the end of that payment cycle, they'd be classed as having over £6k savings.

keira

@Albus_Scope So to keep safe it seems the best way would for them to withdraw all of their ESA/PIP as soon as they are received and before the next payments of both benefits are due?

Albus_Scope

I'm afraid I can't advise there, as legally your friend should let them know about their savings, or they could end up having to pay lots of money back in the future.

W348

Slightly related question and I wanted to jump in here instead of making a new thread.

I was a little confused about PIP as I have recently been awarded this. I understand backpay is disregarded for a year (I think).

But I've read mixed things about PIP in particular, that it doesn't impact savings or other benefits. Is that true?

If monthly PIP payments pushed me over the savings limit does that monthly PIP money count as savings and would impact ESA?

I just want to be sure I understand things correctly. Most of our utility bills gas/electric come in every 3 months. Maybe it would be one less thing to worry about if these bills could be changed to monthly.

poppy123456

@Albus_Scope you're advice isn't correct. Benefits payments are not treated as savings for the period in which they are paid for. They are treated as income. If at the end of that period they have any of those payments left, then it's treated as savings.

For example, If the day before you receive your ESA you have £5,950 in savings and your benefits payment was £250, that £250 isn't savings, it's income because you've only just received it. When you receive your next payment if your total amount you have is more than £6,000 without the next payment then you need to report the changes.

Same applies for PIP but for this you have 4 weeks to spend it before anything left becomes savings.

It would be rather odd if they included your most recent payment as savings before you've had the chance to pay your bills.

Albus_Scope

Ah apologies Poppy, I worded that terribly! I meant if the money was still in the account by the next payment date it'd then count as savings. Is that right?

poppy123456

https://forum.scope.org.uk/discussion/comment/906462#Comment_906462

No worries. Yes, that’s correct.

Albus_Scope

Yay I'm learning! Thanks Poppy. 😁

OverlyAnxious

As they're on legacy ESA, that means they probably received several cost of living payments during 2022/23 which are disregarded indefinitely (for now at least).

So technically their current savings allowance is more than £6k because of that.