State pensioners issued £10,000 savings account alert | Personal Finance | Finance

State pensioners are being warned about a £10,000 savings limit that could affect their eligibility for Pension Credit. The pensions system is complex, and a number of factors can impact the amount of money you get paid every week.

State pensioners can claim Pension Credit, which is worth £238 per week for single people and £363.25 per week for couples, if they have a low weekly income. Many retired Brits rely on this income to live in their old age, but there is a lesser-known eligibility criterion. Those with savings of over £10,000 will see their Pension Credit eligibility reduced.

It is reduced by £1 for every £500 of savings you have above the £10,000 threshold. For example, if you had £11,000 in savings, £2 would be deducted from your weekly Pension Credit entitlement.

The Government’s website explains: “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.”

Meanwhile, Stephen Lowe, director at retirement experts Just Group, warned that the £10,000 threshold could cause some pensioners to lose money and have their benefits reduced.

He told ThisIsMoney: “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 per cent 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.”

If you have too much in savings, you could be ineligible for Pension Credit. While there isn’t a fixed limit on savings, if you had, for example, £110,000 in savings, then £100,000 of your savings would be above the £10,000 threshold.

However, your specific circumstances may be different; how much income you have from your state pension calculation (based on your NI record), your savings and other income are all factored in to your personal eligibility.