State pensioners warned savings cut-off point for benefits | Personal Finance | Finance

December 1, 2024 4,282

Some benefits provided by the Department for Work and Pension come with eligibility criteria, which sometimes includes having less than a specific amount in savings.

This applies to Universal Credit, Tax Credits, Council Tax Support, Income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Income Support and Housing Benefit.

These are known as means-tested benefits and their savings requirements extend beyond the state pension age for Pension Credit, Housing Benefit and Council Tax Support.

Each of these benefits has its own unique cap for savings. Age UK points out that for Pension Credit there is no upper limit, meaning your benefit won’t be completely removed due to accumulating a large amount of savings.

However, if you have £10,000 or more in capital, the payments you receive will start to gradually reduce. For every £500 you have over £10,000, it will be calculated as an extra £1 of income each week.

In practice, this means having £12,000 in savings will see the DWP adding £4 to your income calculations, pushing you towards the weekly income limit to claim Pension Credit, which is £218.15 for singles and £332.95 for couples.

If you’ve saved between £10,000 and £16,000 in savings and investments, it could also trim down your Housing Benefit and Council Tax Support payments. Age UK flags that for those under the state pension age there is a lower savings cap at £6,000.

Should your savings going over £16,000 and, no matter your age, your Housing Benefit or Council Tax Support could be scrapped. But there’s an ‘if’ – as Age UK points out: “This rule doesn’t apply if you receive the Guarantee Credit part of Pension Credit.”

It’s not just savings accounts that the DWP factors into these limits as Age UK shared: