The Department for Work and Pensions (DWP) has issued a warning to state pensioners regarding a £10,000 savings limit that could impact their eligibility for Pension Credit. This vital income-boosting benefit supplements the income of many pensioners, especially those who do not receive the full state pension amount. Under the current system, state pensioners can receive up to £230.25 per week if they have a full National Insurance record.
However, Pension Credit can top up incomes to around £227 per week for those with lower state pension payments. The amount of savings a pensioner has is a critical factor in determining Pension Credit eligibility. If a pensioner’s savings exceed £10,000, their Pension Credit is reduced by £1 for every £500 above this threshold.
Stephen Lowe, director at retirement specialists Just Group, noted that this rule may seem unfair, as many pensioners attempt to maintain a savings buffer for emergencies or unexpected expenses.
Savings threshold impacts Pension Credit eligibility
The government explains, “If you have £10,000 or less in savings and investments, this will not affect your Pension Credit.
However, for every £500 over £10,000, it counts as £1 income a week.” For example, if a pensioner has £11,000 in savings, this is treated as £2 additional income per week. Pensioners with substantial savings could find themselves ineligible for Pension Credit and unable to boost their weekly income from the state. For instance, if someone had £110,000 in savings, £100,000 is above the £10,000 threshold, translating to an additional £200 per week in income, making them ineligible for Pension Credit.
This policy highlights the importance of pensioners carefully managing their savings to avoid losing out on benefits. Certain types of income, such as Personal Independence Payment (PIP) and Disability Living Allowance, are disregarded in Pension Credit calculations. While changes have been made to allow pensioners to claim certain benefits without needing Pension Credit, the savings limit still has a significant impact on many, particularly those who have savings but lack a substantial weekly income.
State pensioners need to stay informed about how their savings might affect their eligibility for pension benefits to ensure they receive the maximum support available to them.
