State pensioners with £10,000 savings having payments cut by DWP
The Department for Work and Pensions has warned state pensioners with £10,000 savings will see their Pension Credit cut. The DWP’s rules for the benefit, which is worth £4,300, has strict rules for those trying to claim.
Under DWP rules, if you have £10,000 or less in savings and investments this will not affect your Pension Credit. If you have more than £10,000, every £500 over £10,000 counts as £1 income a week. For example, if you have £11,000 in savings, this counts as £2 income a week.
If you’re entitled to a personal or workplace pension and you have not claimed it yet, the amount you’d expect to get still counts as income. If you’ve deferred your State Pension, the amount of State Pension you would get is counted as income.
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You cannot build up extra amounts for deferring your State Pension if you or your partner are getting Pension Credit.
Stephen Lowe, director at retirement experts Just Group, said: “The £10,000 lower capital limit means that every £500 of savings – not including the main residential property – held by people who qualify for pension credit counts as £1 income a week, which can erode the income received from the benefit.
“This feels unfair on two fronts given many pensioners will aim to keep a rainy-day fund in the event of emergency repairs or a large, unexpected cost.
“It is the equivalent of a 10.4% interest rate. Secondly, the limit has not moved since 2009 and it is likely therefore that more and more people are seeing their benefit income reduced as they fall into this bracket.”
Age UK adds: “If you reached State Pension age before 6 April 2016 – or if you’re a couple and both of you did – you might be eligible to claim Savings Credit.
“There isn’t a savings limit for Pension Credit. However, if you have over £10,000 in savings, this will affect how much you receive.”
You can continue to get Pension Credit if you’re away from Great Britain for 4 weeks or less – for example, on a holiday.