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AFA > Protection Topic 3 - State Protection Provision > Flashcards

Protection Topic 3 - State Protection Provision Flashcards

1
Q

3 main reasons for the relatively low level of state benefits provided by the government

A
  • Costs involved
  • The way in which they are funded
  • Requirement for individual responsibility of maintaining living standards
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2
Q

Benefits trap

A

when a person claiming benefits would be worse off if they return to work

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3
Q

State benefits are funded on a… basis and are paid from the current taxes and NICs.

A

pay-as-you-go

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4
Q

Main benefits that are means tested:

A
  • JSA, ESA and income support (these are no longer claimable)
  • Pension credit (only if reached state pension age before 6 April 2016)
  • Universal credit
  • Housing benefit
  • Council tax reduction
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5
Q

Once earnings have been established, these specified outgoing can be subtracted when assessing income:

A
  • Rent or mortgage interest
  • 80% of council tax
  • Income tax and NICs
  • Half of occupational/personal pension contributions
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6
Q

What are the upper and lower thresholds for savings when assessing eligibility for state benefits

A

£6k, £16k

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7
Q

Income support

A
  • No longer available for new claims
  • Tax-free benefit for people who couldn’t work due to their personal circumstances
  • Means tested on savings and income
  • To be eligible must have worked for less than 16 hours per week

Payments were made up of 2 parts:

  • Personal allowances – covers day-to-day living expenses
  • Premiums – additional payments to people who really need it
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8
Q

Jobseeker’s allowance (JSA)

A
  • For people aged between 18 and state pension age who are unemployed and searching or working less than 16 hours a week
  • Taxable
  • Credited with NICs for every week they receive JSA
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9
Q

3 forms of JSA

A
  • ‘New style’ – depends on having paid enough class 1 NICs, paid at fixed rate with no benefits
  • Contribution-based – depends on same details as new style but could only claim if they received the severe disability premium or were eligible for it
  • Income-based – replaced by universal credit
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10
Q

Eligibility for new style JSA means satisfying a number of requirements including

A
  • Previously an employee
  • Have paid class 1 NICs in the last 2 or 3 years
  • Be capable of actively searching for work for at least 40 hours a week
  • Out of work or working fewer than 16 hours a week
  • Normally over 18
  • Not in full-time education
  • Have signed a jobseeker’s agreement
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11
Q

Benefits payable during pregnancy

A
  • Statutory Maternity Pay (SMP)
  • Statutory Paternity Pay (SPP)
  • Maternity Allowance (MA)
  • Statutory Adoption Pay (SAP)
  • Shared Parental Leave (SPL)
  • Statutory Shared Parental Pay (ShPP)
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12
Q

SMP

A
  • SMP paid by employer if woman takes time off for pregnancy
  • Must have worked for the same employer without a break for at least 26th week (including the 15th week before the baby is due, known as the qualifying week)
  • Must have average earnings that are relevant for NI purposes (earnings above lower earnings limit)
  • Payable for a max. of 39 weeks
  • First 6 weeks woman is paid 90% of earnings, after this it is reduced with a max. of 90%
  • Taxable and NICs are due
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13
Q

SPP

A

Payable to employee whose spouse has given birth and is responsible of bringing up. Payable for max. of 2 weeks.

To be eligible claimant must:

  • Be father, adopter, husband, partner or civil partner
  • Employed by employer for 26 weeks without break by the 15th week before birth
  • Must continue to work for same employer until child is born
  • Have earnings above the lower-earnings-level (LEL)
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14
Q

Maternity Allowance (MA)

A
  • For mothers who cannot claim SMP, could be for self-employed
  • Paid at flat rate by department for work and pensions (DWP)
  • Paid at lower rate than SMP but not taxable and not subject to NICs
  • Available for 39 weeks
  • For people above LEL, flat rate is paid, below LEL is 90% of average earnings
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15
Q

Statutory Adoption Pay (SAP)

A
  • Paid for max. of 39 weeks
  • Paid when they have been notified that they have been matched with a child
  • Must have been working for employer for at least 26 weeks up to the week they get notified
  • Must have weekly earnings above a specified minimum amount
  • Must have average weekly earnings above a minimum amount
  • 2 rates of SAP – first 6 week is at 90% of salary, after this is lower rates up to max. of 90%
  • Taxable and NICs due
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16
Q

Shared Parental Leave (SPL) and Statutory Shared Parental Pay (ShPP)

A

These 2 benefits allow the parents to split the time off that are given from the benefit. SPL gives 50 weeks off (37 are paid) and ShPP gives 37 weeks. ShPP paid at lower of a statutory amount or 90% of earnings.

After birth, mother can cut short her Maternity leave, adoption pay and exchange it for SPL or cut short her MA, SMP or adoption pay and exchange for ShPP. Leave can be separated into 3 blocks between both partners.

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17
Q

Child benefit

A
  • Tax-free benefit for parents that are bringing up a child
  • Means tested – if someone in the household earns over £50,000 (net adjusted) then a higher rate tax charge is due at 1% for every £100 over the threshold
  • If over £60,000, it is still payable but taxable to the full amount of benefits paid
  • Paid from birth until 16
  • 2 rates paid – higher rate for eldest child and lower rates for any subsequent child
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18
Q

Guardian’s allowance

A

a benefit paid to the people bringing up a child if both parents die. They do not have to be the legal guardian to claim this.

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19
Q

Tax credits were revised in 2002 and this came with 2 new credits –

A

Working tax credit (WTC) and Child tax credit (CTC). To qualify for tax credits you must be over 16 and live in the UK.

20
Q

The amount of tax credits payable will depend on:

A
  • Number of children living with the claimant
  • Whether the claimant works
  • Whether the claimant has childcare costs
  • Whether the claimant or one of the children has a disability
21
Q

Tax credits are administered by

A

HMRC

22
Q

Working tax credit (WTC)

A
  • Paid to top-up low earning parents
  • Eligibility based on previous year’s income with a benchmark figure
  • Earnings below the benchmark award the maximum benefits
  • Earnings above will still receive reduced benefits up to an upper income threshold
  • The payment is made up of a basic adult element and additional elements
23
Q

Child tax credit (CTC)

A

CTC combined the various strands of income support into one benefit. This is for those who are responsible for at least 1 qualifying child.
Only people who claim WTC can apply for CTC. Eligibility mainly determined by responsibility for a child, but benefits decrease as income increases.

CTC has 2 elements:

  • Family element paid to the family – paid at a higher rate if the child is not 1 yet
  • Child element paid for each child that is qualifying
24
Q

Statutory Sick Pay (SSP)

A
  • Paid for illness or disability for 4 or more consecutive days
  • Paid for a maximum of 28 weeks
  • Must be 8 weeks between claims for them to be ‘separate claims’, otherwise treated as one claim
  • Payable to all employees above lower earnings level
  • Not means tested
  • Subject to tax and NICs
25
Q

Incapacity benefit (IB)

A
  • No longer around, replaced by Employment Support Allowance (ESA)
  • Was available for people who were ill for 4 or more consecutive days
  • For people who could not claim SSP
  • The right to receive depends on class 1 & 3 NICs paid
  • Three different levels of benefit
  • Not means tested
26
Q

Employment and Support Allowance (ESA)

A

ESA philosophy was to focus on capability rather than inability.

ESA claimants are expected to make provisions and prepare for work – a work capability assessment (WCA) is used for this process.

27
Q

To be eligible for ESA the claimant must:

A
  • Be over 16 and under state pension age
  • Have worked as employee or been self-employed
  • Paid sufficient NICs
  • Not be claiming JSA
  • Be unemployed
  • Be self-employed
  • Unable to get SSP
  • SSP receipt has stopped
28
Q

What are the 2 separate phases of ESA and what happens in each:

A
  • Assessment phase – first 13 weeks where assessments are taken (such as the WCA) and capability to work is assessed. Basic rate paid here
  • Main phase – from the 14th week claimants are placed into 2 groups (work-related and support) and they will receive payments in-line with the capacity to work
29
Q

Attendance Allowance (AA)

A
  • Benefit for people over state pension age who need help with personal care
  • Tax-free
  • Not means tested
  • 2 levels of cover – lower rate for people who need care by day OR night, higher rate for people who need care day AND night
30
Q

Personal Independence Payment (PIP)

A
  • Replaced Disability Living Allowance
  • Helps people with additional costs arising from illness or disability
  • Amount of benefit depends on severity of issue
  • Made up of 2 elements – daily living component and mobility component
31
Q

Carer’s allowance (CA)

A
  • Paid to carer’s, flat rate but additional rate if children or partners are in the picture
  • Taxable
  • Not means tested
32
Q

Industrial Industries Disablement Benefit (IIDB)

A
  • For people who are injured or ill from work related incidents
  • Tax-free
  • Level of claim depends on level of disability
  • Not available if claimant was self-employed at the time
33
Q

What benefits does UC replace

A
  • Income support
  • Income based JSA
  • Income related ESA
  • Housing benefit
  • Child tax credit
  • Working tax credit
34
Q

Claims for UC are made per…. rather than per person

A

household

35
Q

Universal credit is a basic allowance with additional payments for people who have

A
  • Responsibilities as a carer
  • Children
  • Housing costs
  • Childcare costs
  • Limited capability for work
36
Q

Bereavement support payment

A
  • This is the new one that replaced the previous 3
  • Benefit payable when husband, wife or civil partner dies
  • Claims must be made within 3 months to receive the full amount, but can be made up to 21 months after for a reduced amount
  • Payment consists of tax-free lump sum and income for up to 18 months
37
Q

Bereavement payment

A
  • One-off lump sum
  • Paid £2,000
38
Q

Bereavement allowance

A
  • Taxable income for if your partner died over the age of 45
  • If they were over 45 but had a child, they would claim Widowed parent’s allowance (WPA) instead
39
Q

Widowed Parent’s Allowance (WPA)

A
  • Taxable income payment
  • Paid if late spouse met the NIC requirements, if their death was caused by their job or if they were bringing up at least 1 child
40
Q

Inheriting SERPS and S2P

A

SERPS

  • On death before October 2002, 100% was inherited
  • On death after October 2002, 100% can be inherited if deceased was at least state pension age
  • If not, then the inheritance decreases in line with this table

S2P

  • Can inherit a maximum of 50% of the partner’s S2P
41
Q

Support for Mortgage Interest (SMI) paid as a loan to people if they are struggling with payments and receive any of these benefits:

A
  • Income support
  • Income based ESA
  • ESA
  • Universal credit
  • Pension credit
42
Q

Claiming features of Support for Mortgage Interest (SMI)

A
  • After a claim, payments will not commence for another 39 weeks
  • Pensioners receiving pension credit will have no deferred period
  • Pays interest on loans up to £200,000, will only cover the first £200,000 if more
  • Pensioners claiming pension credit only go up to £100,000
43
Q

Benefits subject to the benefits cap are:

A
  • Bereavement allowance
  • Child benefit
  • Child tax credit
  • ESA
  • Housing benefit
  • Incapacity benefit
  • Income support
  • Jobseeker’s allowance
  • Maternity allowance
  • Severe disability allowance
  • Widowed parent’s allowance
  • Universal credit
44
Q

Prior to November 2016, benefits were limited to:

A
  • £500 per week for couples and single parents
  • £350 per week for single adults with no children
45
Q

Since November 2016, the rates of benefit caps depending on where you live. This is separated as inside and outside greater London:

A

Outside greater London - £384.62 a week (£20,000 pa) for couples, or single parents, and £257.69 a week (£13,400 pa) if you are a single person with no children.

Inside greater London - £442.31 a week (£23,000 pa) for couples or single parents, and £296.35 a week (£15,410 pa) if you are a single person with on children.

AFA (38 decks)

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