State pensioners are being reminded about a critical £10,000 savings threshold that could influence their eligibility for Pension Credit payments from the Department for Work and Pensions (DWP).
If your combined savings and investments total £10,000 or less, your Pension Credit entitlement remains unaffected. However, once you exceed £10,000, every additional £500 is considered as £1 extra weekly income. For instance, if you have £11,000 saved, this counts as £2 in weekly income, potentially reducing the benefit you receive.
Personal or workplace pensions that you have yet to claim are also counted as income when determining Pension Credit eligibility. Similarly, if you have deferred your State Pension, the amount you would have received during the deferral period is treated as income. Importantly, deferring the State Pension does not build up additional entitlements if you or your partner are already receiving Pension Credit.
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Stephen Lowe, director at retirement experts Just Group, explains: “The £10,000 lower capital limit means that every £500 of savings—excluding the main residential property—for Pension Credit claimants counts as £1 income per week, which can reduce the benefit amount. This approach is arguably unfair, as many pensioners keep savings as a safety net for emergencies or unexpected expenses.”
He added, “The effective rate is like a 10.4% interest charge on savings, and since the threshold hasn’t been updated since 2009, more pensioners are likely to see reduced benefits as their savings grow above this limit.”
Age UK notes that those who reached State Pension age before 6 April 2016—or couples where both partners did—may also be eligible for Savings Credit, which is separate from Pension Credit. While Savings Credit has no savings limit, Pension Credit recipients with over £10,000 in savings will see their benefits affected.
Additionally, you can continue to receive Pension Credit if you travel outside Great Britain for up to four weeks, such as for a holiday, without losing entitlement.