Chapter 3 Flashcards
What factors affect the availability of state benefits? Name at least 4
Income and saving level
Employment status
State of health
Age, marital status and dependent status
Mortgage debts
How can state benefits affect financial planning cover?
Providing safety net - smaller shortfall in terms of financial protection needs, less private cover required
Emphasising the need for cover - so basic you can’t solely rely on them
How are state benefits paid?
Normally through DWP
Sometimes through HMRC eg Working and Child tax credit
Name 2 ways means testing is conducted?
1 - is your national insurance contribution record good enough. If not benefits may be scaled back - known as contributory or non-contributory planning
2 - are you too wealthy. Benefits removed if you have either too much income or capital
What areas do state benefits cover? Name at least 5
Unemployment/ low income
Short and long term sickness
Bringing up children
Mortgages
Disability
Retirement
Death of spouse or civil partner
What benefits are available to those unemployed or on a low income?
Job seekers allowance
Income support
Working tax credit
Statutory redundancy payments
Explain what job seekers allowance is?
Unemployment benefit for this fit and available to work and actively seeking employment
What is income support?
Financial support for those working but on a low income. No longer available to new applicants as replaced by universal credit
What is the Working Tax Credit?
In-work credits to those on low incomes, paid through HMRC
Can be claimed by individuals with or without children
No longer available to new applicants as it has been replaced by universal credit
What is statutory redundancy pay?
Employer redundancy payments in line with statutory, set criteria for
Who is eligible for job seekers allowance? What do they get?
Aged 18 and state pension age working less than 16 hours weeks
Under 25 eligible for up to £71.70
Over 25 eligible for up to £90.50
Who is eligible for income support?
Aged between 16 and state pension age working less than 16 hours weekly
Who is eligible for Working Tax Credit
Individuals aged over 16 with children, working at least 16 hours weekly
Individuals without children, aged over 25, working at least 30 hours
Individuals aged over 16 without children, working at least 16 hours weekly with a disability
Who is eligible for statutory redundancy payments ?
Employees that have worked at an employer for at least 2 years
How is job seekers allowance paid?
Contribution based job seekers allowance (based on national insurance contributions record, not means tested) is paid for maximum initial 6 months
Income based job seekers allowance (not based on NICs record but means tested ie income/capital less that £16,000) was paid thereafter
Now replaced by universal credit
How is income support paid?
Capital and income means tested
Capital of £6,000 and above will reduce income support paid
No benefit paid if capital above £16,000.
Benefit reduces £1 for every £250 capital
Not based on NICs record
How are statutory redundancy payments paid?
Half weeks pay for each service year if aged under 22
One weeks paid at if 22-40
1.5 weeks pay if 41+
20 year cap on service years
Which benefits for unemployment or low income are taxable/ non taxable?
JSA - taxable
IS - non taxable
Working tax credit - non taxable
Statutory redundancy payments - first £30k tax free, excess taxable
What state benefits are available for short and long term sickness?
Statutory sick pay
Employment and support allowance (ESA)
What is statutory sick pay?
A benefit paid by employers for employees off sick for four or more days in a row
Who is eligible for statutory sick pay?
Employee income must be and average of at least £123 per week - lower earnings limit
SSP weekly rate £116.76
How is statutory sick pay paid
Not means tested
Paid for maximum of 28 weeks
