2.2 - The Benefit System Flashcards
What two benefits are the UK’s benefit system divided into?
- Contributory benefits
- Non-contributory benefits
What are contributory benefits?
Benefits paid to claimants that have paid the required number of NICs
How do employees pay NICs?
They are automatically deducted from their salaries by the employer
What are non-contributory benefits?
Benefits paid to claimants who have either not paid enough NIC’s to claim contributory benefits or need a top-up payment because the contributory benefits do not meet their income needs
Why did creators of the National Insurance system make it contributory?
- To fund the benefits
- Some would be too proud to accept benefits unless they felt they were fully entitled
Why are benefits paid at a flat rate?
- To keep costs of the system in check
- To avoid problems with means testing
What is a means test?
A detailed examination of a persons income
Under what circumstances are means-tested benefits reduced?
- If household income is above a certain level
- If you have more than £6,000 in savings
What is jobseeker’s allowance?
The main benefit for those of working age who are not working full time but are able to
Contributory and non-contributory JSA claimants receive the same weekly cash benefit - true or false?
True
At what age is a higher JSA rate paid to claimants?
25 and over
Requirements to be eligible for contributions-based JSA
- Aged between 18 and retirement age
- Work less than 16 hours a week
- Not a full-time student
- Able to work
Who is income-based JSA available to?
Unemployed people who have not paid the required amount of NIC’s
What are the differences between income-based JSA and contributions-based JSA?
- Contributions-based JSA is paid for only six months, income-based JSA does not have a time limit
- To be eligible for income-based JSA, you must have less than £16,000 in savings and neither you nor your partner should be working more than 24 hours a week on average
Is income-based JSA means-tested?
Yes
How can someone previously self-employed claim income-based JSA?
By showing that the business is no longer trading
Statutory Sick Pay definition
A benefit that provides an income, via the employer, when sickness or disability prevents an individual from working
Your employer has to pay you SSP is you have been off sick for how many days?
Four or more
How is SSP paid?
At a fixed weekly amount for a maximum of 28 weeks
Employment and support allowance definition
A benefit that provides an income directly from the state when sickness or disability prevents you from working.
How can you claim ESA?
If you have been getting SSP for the maximum 28 weeks or if you are self employed and the illness/disability prevents you from working
Is ESA contributions-based, non-contributions based or income-based?
Contributions-based or income-based
How is ESA paid?
At a standard weekly benefit for the first 13 weeks for all claimants aged 25 or over and at a lower rate for those under the age of 25.
What happens after 13 weeks of receiving ESA?
Claimants are allocated into the work-related activity group or the support group
Who does the work-related activity group include?
Those whose illness or disability is not considered too severe to prevent them from returning to work
Which group do claimants have to attend regular meetings?
The work-related activity group
Are work-related activity group claimants allowed to work?
Part time, no more than 16 hours per week
Who does the support group include?
Those whose illness or disability seriously limits the work that they can do
Are support group claimants allowed to work?
Up to 16 hours a week but only with support by the council or voluntary organisation
Who is Personal Independence Payment payable to?
Those aged 16-64 who have a long-term illness/disability that means they are unable to perform basic daily living activities
What do people over 65 claim instead of PIP?
Attendance Allowance
Who is carer’s allowance paid to?
Anyone over 16 who spends 35 hours per week or more looking after someone who has substantial care needs
What does the money from disability allowance go towards?
- Home help
- Cleaning services
Who is housing benefit paid to?
Those with low incomes, either because they are in low-paid work or they are not employed
Single people under the age of 35 can only claim Housing Benefit if what?
They live in a bedsit or a single room within a house or flat that they share with others
What can cause Housing Benefit to be reduced?
- Paying unreasonable high rent to a private landlord
- In social housing and have more bedrooms than needed
- Household income is above threshold
- Savings of more than £6,000
What does Support for Mortgage Interest pay for?
The interest due on the mortgage and not any capital repayment, insurance policy payments or mortgage arrears.
Is there a time limit on SMI?
Yes
What additional benefits may those eligible for JSA, ESA and/or Housing Benefit be able to claim?
- Council Tax Reduction
- Cold Weather Payments
What is Cold Weather Payments?
An extra payment of £25 a week to people already receiving benefits when the temperature in the area drops to an average of 0 degrees or below over 7 consecutive days
Income support definition
A payment designed to provide a safety net for those not eligible for other allowances, to provide money to pay for basic needs.
Ways to be eligible for income support:
- Not eligible for JSA or ESA
- Not working or working less than 16 hours a week because:
- Pregnancy
- A full-time carer
- A single parent with a child under the age of 5
Basic state pension definition
A non-means-tested contributory benefit paid to everyone who has reached state pension age and who has paid sufficient NIC’s
How to be eligible for the new state pension
Reach retirement on or after 6 April 2016
Requirements for state pension
- 10 qualifying years of NIC’s to get any state pension
- 35 years of NIC’s to get full new state pension
How does the rate of basic state pension increase each year?
Whichever is highest out of: - In line with rate of UK inflation - In line with annual increase in average earnings - 2.5% (triple lock guarantee)
How many hours is full-time?
- 30 hours per week or more
- 16 hours per week for disabled workers, those over 60 and single parents
Who in the couple receives the Working Tax Credit Payment?
The partner who works the most hours each week
Who in the couple receive the Child Tax Credit payment?
The partner who spends the most time caring for the child
Statutory Maternity Pay definition
A benefit paid to mothers while they are not working before and after their baby is borm
How long must an employer pay SMP for?
Up to 39 weeks
Statutory Paternity Pay definition
A benefit payable to fathers to enable them to take time off work to support their partner when a baby is born.
How long is SPP paid for?
One or two weeks unless the mother returns to work before using the full 39 weeks of maternity leave, in which case the father can take Additional Paternity Leave
Benefits cap definition
A limit to the total amount in some benefits that working-age people can receive
What is the benefit cap for a single person with no children?
£350 per week
What is the benefit cap for a couple or a lone parent?
£500 per week
Housing Benefit rules:
- One bedroom for each adult/couple
- Up to two children under the age of 10 must share a bedroom, same applies to same-sex children aged between 10 and 16
Purpose of Universal Credit
Simplify benefits system by replacing six existing benefits with a single monthly payment for those living on a low income
What six benefits are being replaced by Universal Credit?
- Income-based JSA
- Income-based ESA
- Income support
- Housing benefit
- Child Tax Credit
- Working Tax Credit
Is Universal Credit means-tested?
Yes
What is the triple lock guarantee designed for?
To ensure that state pension stays the same in real terms from year to year
An additional tax charge will be payable by those in receipt of Child Benefit whose earnings exceed:
£50,000 a year
Purpose of MAT
To help people across the UK to tackle their debts and manage their money wisely.
