The Department for Work and Pensions (DWP) has been urged to make a change to an ‘unfair’ rule that could see pensioners lose out on thousands of pounds in payments
State pensioners risk losing Pension Credit due to an “unfair” Department for Work and Pensions (DWP) threshold.
You can hold up to £10,000 in savings and investments without it affecting your pension credit if you satisfy other eligibility criteria. “Pension credit is means tested – but the “means” that are tested aren’t what they were because of inflation,” says Henry Tapper, chair of AgeWage and Pension Playpen.
“Refreshing the amounts people can have in their accounts before losing a pension credit claim is both just and easy for the Department for Work and Pensions to do.” It comes after news of state pension payment changes for August as people told to ‘be aware’.
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Mr Tapper added: “An announcement from the DWP on this could trigger many people to look again at pension credit and inroads in the estimated 850,000 pensioners eligible but not claiming”, reports Birmingham Live.
Stephen Lowe, a director at retirement specialist 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 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.”
Former Pensions Minister Ros Altmann, who now sits in the House of Lords, said: “There are huge problems with the help available to the lowest income pensioners.
“So many are too proud to claim what they see as “handouts” even though this is part of their entitlement because we all know the UK state pension is so low relative to all other developed countries.
“Those just above the pension credit level lose out on thousands of pounds of extra benefits which pension credit recipients can enjoy – such as council tax and energy bill rebates, free TV licences and healthcare, so they end up far worse off than others just because they have small pensions or some savings.
“Thirdly, the savings aspect of pension credit does not look at the actual income savers receive. If they have over £10,000 savings, the means test assumes they receive a level of interest far, far above market rates – over 10 per cent interest!”
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