Don’t make this mistake with your savings

by Mike10613 on 30 April 2010  |  4 comments
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lovemoney.com reader Mike10613 shares his thoughts on why pensioners should fetch up the floorboards and get their stash of cash to the bank.

This is a guest blog by regular lovemoney.com reader Mike10613 - we hope you enjoy it!

A few years ago one of my friends was upset when her elderly parents were robbed of over £2,000. The thief just walked into their home and went through some drawers, found the money and walked out. It turned out he was a drug addict and so it could have been worse if they had disturbed him.

Not long after, my friend’s father died and they needed that money to pay for the funeral costs.

So why do elderly people keep so much money in their homes? One reason is getting to the bank; it isn’t easy when you are elderly, sick or disabled. This makes the most vulnerable in society even more vulnerable to thieves when they have to keep money in their homes; often to pay neighbours or care workers who do shopping for them.

In the past, there was also a rule that you could only have £6,000 in savings and investments to receive certain benefits in full – such as the pension credit, housing benefit and council tax benefit. When funerals cost well over £2,000 a time, that limit was ridiculously low. So some people preferred to keep savings in drawers, under the mattress or, more traditionally, under the floorboards!

But the problem with some elderly people’s bungalows is that they aren’t designed very well. In the above case, the thief simply walked through the front door and into the bedroom, because the bedroom was right at the front of the bungalow.

If the threat of having your savings stolen isn’t enough of an incentive to move them into a bank account, there’s now an even greater reason to open those drawers, lift the mattress or fetch up the floorboards! And that’s because at the end of June, the Bank of England is withdrawing all those £20 notes that carry the portrait of Sir Edgar Elgar on the back.

Of course, you will still be able to take them to the bank and change them after that; for a few months at least. But you’d be far better off taking them to the bank now and depositing them in your savings account where they will be safer.

Last November, the £6,000 benefit rule was also raised to £10,000. So there’s even less of a reason to keep cash in the home. And of course, if you are claiming Council Tax benefit or Housing Benefit, you would be committing benefit fraud if you deliberately hid anything over this limit from the tax man.

Many elderly people will, of course, still want keep some at home to last through bad weather and periods of illness; but there is no need to stash thousands under the floorboards.

So make sure you check whose head is on the back of your stash of cash now and try to get them in the bank as soon as possible. If you wait too long you could end up having to send them to the Bank Of England.