Future benefits and income seeing the whole picture
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Future Benefits and Income Seeing the Whole Picture . Gareth Morgan Ferret Information Systems NAWRA Swansea March 6 th 2009. Starting a New Job. Unemployed for some time Couple, 2 kids, partner at home Starts work 27/11/2008 Salary £27,000 gross Mortgage £150,000 Council Tax £1,400 pa.

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Future benefits and income seeing the whole picture l.jpg

Future Benefits and IncomeSeeing the Whole Picture

Gareth Morgan

Ferret Information Systems

NAWRA Swansea March 6th 2009

Ferret Information Systems


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Starting a New Job

  • Unemployed for some time

  • Couple, 2 kids, partner at home

  • Starts work 27/11/2008

  • Salary £27,000 gross

  • Mortgage £150,000

  • Council Tax £1,400 pa

Ferret Information Systems


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Starting a New Job – 3 Year View

Monthly drop in net income of £963,08. Starting net is 50% higher than steady-state

Ferret Information Systems


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Couple – 1 Loses Job

  • Just lost job at £27,000

  • Couple, 2 kids, partner earns £9,000 full time

  • Stops work 27/11/2008

  • Mortgage £150,000

  • Council Tax £1,400 pa

Ferret Information Systems


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Couple – 1 Loses Job – 3 Year View

Monthly increase in net income of £489.89. Steady-state is 47% higher than starting rate

Ferret Information Systems


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Unemployed Approaching Pension Age

  • Unemployed for just over a year

  • Couple, 0 kids, partner at home

  • Mortgage £150,000

  • Council Tax £1,400 pa

  • 59 years old

Ferret Information Systems


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Approaching Pension Age – 3 Year View

Monthly increase in net income of £409.07. Steady-state is 41% higher than starting rate

Ferret Information Systems


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Loses Only Job

  • Unemployed for 3 months

  • Single, 0 kids

  • Mortgage £150,000

  • Council Tax £1,400 pa

Ferret Information Systems


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Loses Only Job – 3 Year View

Monthly drop in net income of £455.99. Starting net is 117% higher than normal

Ferret Information Systems


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New SMI Rules

  • Mortgage Interest, a long time ago, was linked to the amount paid.

  • Then it became linked to base rate, 1.58% above.

  • Now, for an indefinite period it is set to a notional rate of 6.08%

  • A mortgage of £150,000 at 4% will cost £500 a month

  • The SMI figure in benefits will be £760 a month

  • A net ‘profit’ of £60 a week

Ferret Information Systems


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Homeowners Mortgage Support Scheme

Back to the 1 of a couple loses a job example, with a 5% interest rate.

Ferret Information Systems


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Homeowners Mortgage Support Scheme –with housing costs

The HMSS scheme requirements include “testing the long-term sustainability of their financial position”

Ferret Information Systems


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Sale and Rent Back

As in the HMSS example but with constant interest payment.

Ferret Information Systems


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Sale and Rent Back - Rental

Based on a rent of £100 per week and a LHA limit of £75 per week.

Ferret Information Systems


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Past Performance is no Guarantee

  • Assessments are still being made on the basis of past performance and status

  • does not consider changing circumstances or the future situation

Ferret Information Systems


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Understanding Sustainability

  • Not enough to consider the different types of income: earnings, benefits, tax credits, pensions, interest, dividends etc. We also need to understand which of them are long term, which short term and which of them will change, predictably, in the future.

  • The same is true for outgoings. We should recognise the impact of taxes and national insurance, of contributions to savings and pensions, of housing costs, household expenditure, repayments and whether they will vary in the future in ways that can be foreseen.

Ferret Information Systems


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The Snapshot Advice Session

  • The figures were going to be the same until something happened to the client and then they could come back for another session.

  • Now much more interaction between the tax, benefits, credit and other systems with increasingly complex rules determining how incomes and expenses in one area are treated in another.

  • The client needs a holistic view which takes account of their overall circumstances and, ideally, gives them a bottom line picture of their entitlements, rights and responsibilities.

Ferret Information Systems


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Variability of Benefit Income

Ferret Information Systems


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Common Financial Statement

Ferret Information Systems


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Sustainability

  • Affordability over a period of time

  • Informed choices for customer

  • Informed choices for provider

  • An early picture of reality

  • Showing predictable changes over time

Ferret Information Systems


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Ferret

You’ll quickly see the benefit

Ferret Information Systems


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