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Future Benefits and Income Seeing the Whole Picture

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

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  1. Future Benefits and IncomeSeeing the Whole Picture Gareth Morgan Ferret Information Systems NAWRA Swansea March 6th 2009 Ferret Information Systems

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. Loses Only Job • Unemployed for 3 months • Single, 0 kids • Mortgage £150,000 • Council Tax £1,400 pa Ferret Information Systems

  9. Loses Only Job – 3 Year View Monthly drop in net income of £455.99. Starting net is 117% higher than normal Ferret Information Systems

  10. 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

  11. Homeowners Mortgage Support Scheme Back to the 1 of a couple loses a job example, with a 5% interest rate. Ferret Information Systems

  12. Homeowners Mortgage Support Scheme –with housing costs The HMSS scheme requirements include “testing the long-term sustainability of their financial position” Ferret Information Systems

  13. Sale and Rent Back As in the HMSS example but with constant interest payment. Ferret Information Systems

  14. Sale and Rent Back - Rental Based on a rent of £100 per week and a LHA limit of £75 per week. Ferret Information Systems

  15. 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

  16. 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

  17. 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

  18. Variability of Benefit Income Ferret Information Systems

  19. Common Financial Statement Ferret Information Systems

  20. 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

  21. Ferret You’ll quickly see the benefit Ferret Information Systems

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