The Department for Work and Pensions (DWP) has issued a warning that state pensioners with savings exceeding £10,000 will face reductions in their Pension Credit. This benefit, worth up to £4,300 annually, is subject to strict rules regarding savings and investments.
Under current DWP regulations, savings and investments of £10,000 or less do not affect Pension Credit eligibility. However, any amount above £10,000 is treated as income: every £500 over the threshold counts as £1 of weekly income. For instance, someone with £11,000 in savings would have £2 counted as income each week.
Additionally, if you are entitled to a personal or workplace pension but have not yet claimed it, the expected amount is still considered income. Similarly, deferred State Pension amounts are counted as income. Notably, you cannot accrue extra deferral amounts if you or your partner receive Pension Credit.
Stephen Lowe, director at retirement specialists Just Group, commented: "The £10,000 lower capital limit means that every £500 of savings – excluding the main residential property – held by pension credit claimants counts as £1 income per week, which can erode the benefit. This feels unfair on two fronts: many pensioners keep a rainy-day fund for emergencies, and the effective interest rate is 10.4%. Moreover, the limit has not changed since 2009, so more people are seeing their benefit reduced."
Age UK adds: "If you reached State Pension age before 6 April 2016 – or if you and your partner both did – you may be eligible for Savings Credit. There is no savings limit for Pension Credit, but savings over £10,000 affect the amount you receive. You can continue to get Pension Credit if you are away from Great Britain for 4 weeks or less, for example on holiday."
