State pensioners warned over £10,000 rule for winter fuel payment | Personal Finance | Finance

Winter fuel payments are set for changes this year after the government confirmed it would take another look at the eligibility criteria for the £200 to £300 cash for state pensioners.

But there is a little known rule for claiming the benefit which will net you a winter fuel payment that’s unlikely to be altered.

Currently, state pensioners are eligible for a winter fuel payment if they claim Pension Credit. This is the government’s way of means testing the money. The change, which was put in place in 2024, was criticised by some for being too restrictive, leading to the announcement last month that the eligibility criteria may be retooled for winter 2025. But there is one restriction which for now remains in place – the £10,000 rule for Pension Credit.

State pensioners can claim Pension Credit if they earn less than about £227 per week. For those on the old basic state pension – which pays a maximum of £176.45 per week, even with a full National Insurance record – it could top up your weekly income to almost the same level as a state pensioner on the new post-2016 state pension (Pension Credit is £227.10, but the full new pension is just a few pounds more at £230.25).

But there is another eligibility criterion, not just weekly income: savings. If you have savings above £10,000, your Pension Credit eligibility will be reduced by £1 for every £500 of savings you have above the £10,000 threshold.

The government’s gov.uk site 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.”

It means that if you have too much money in savings, you could be ineligible for Pension Credit and in turn, unable to claim a winter fuel payment (because you need to claim Pension Credit to claim a winter fuel payment).

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. £100,000 is 200 increments of £500, which means the eligibility calculation would equivocate that to £200 per week income.

If you also had a state pension payment of £176.45 per week, that would be £376.45 and you wouldn’t be eligible for Pension Credit, nor a winter fuel payment in turn. Of course, 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.

Some types of income are disregarded in calculations, for example Attendance Allowance, PIP, Disability Living Allowance and some other DWP benefits do not count, as well as any adoption or fostering allowances,a dependant child’s income or Scottish Carers Allowance Supplement payments.