Pension Credit Savings Conundrum

Thanks for your latest detailed responses. I had visions of PC withholding an entire monthly payment on account of my having briefly strayed over the £10,000 cut-off line. But hopefully I can relax now. Incidentally, most of the above cited sum is held in an ISA, which as a home owner I keep back in case something seriously expensive occurs, such as (for instance) having to stump up £££ to replace an ailing central heating system, et cetera.

Again many thanks.

Exactly right.

Technically the deduction is £1 per week is for each £500 (or part of £500) over £10,000.

As SP is paid four weekly, I am assuming you mean Pension Credit of £300 four weekly of £75 per week.

I am assuming you are single and that no savings deduction has been made yet.

Working backwards. £227.10 is the limit of Pension Credit so if you have £75 a week of Pension Credit, your other pension and any other income is £152.10 pw.

Add a notional £1 on to your income for savings over £10,000 will make no difference overall. You wlll just get Pension Credit of £74 pw instead on £75 pw but your income will still be topped up to £227.10.

In the example I gave above, where someone has saving of £23,000 giving rise to a notional income of £26 pw (£13,000/500) that would be £152.10 plus £26 = £178.10. That person would get Pension Credit of £49.00 pw to bring their income up to the same £227.10 pw

But if they had savings of £37,500, that would mean a notional income of £75 (£27,500/500). Add that to £152.10 makes £227.10. They would not get any Pension Credit.

Say that person spend or gave away some of their savings in order to get Pension Credit, the sum given away could still be counted as notional capital as if they still had the money.

A claimant is not treated as depriving themselves of capital if they use it to reduce or pay a debt owed by them; or purchase goods or services if the expenditure was reasonable in the circumstances of their case.

As I understand it £1 per week would be deducted if a person has savings over £10,000 but below £10,500. Therefore, regardless whether you have £10,050 or £10,499 there would be a £1 deducted from the pension credit. If that person had £10,501 in savings there would be a deduction of £2 per week - and so on.
It is also my understanding that spending savings on what is understood by the DWP as frivolous can be considered as being deprivation of capital and then, despite you no longer having the capital they would consider it as notional capital - ie. as if you still have the money. If, however, you spend the money above the £10,000 capital on essentials eg. new bedding, furniture, white goods or even groceries etc this is not treated as deprivation.
I hope this is helpful.

PS. I forgot to mention that the Pension Credit I receive is a top-up of £300 per month to suppliment my State Pension. My total savings currently stands at £10,050 - an excess of £50, in short. So what impact would this have regarding any future payments I am likely to receive as a result?

Quote: "Say you are single, and have a State Pension of £202 pw (which is the national average) and no other income. That £500 savings counts as £1 of extra income a week making a total of £203 pw."

Thanks for that, PaynesGrey. My question, however, is this: if I had £10,500 saved in my bank account, how much would PC deduct from the monthly allowance it normally pays into my account in order to recoup this £500 excess?

Lathyrus3

Better to spend than save 🤔🤣

Systems drive behaviour; they always have. Sometimes in a way completely contrary to what the system makers wanted.

At only £500, I would spend it. It could be something frivolous - a few days away on holiday or something practical - new warm winter clothes. But just spend it.

I used to work as a Home Advisor for Age Concern 9as was) and I got so frustrated with people who did not qualify for PC because their savings were too high and at the same time also refused to use the money to buy extra comforts, sometimes urgent house repairs because their savings were for a rainy day.

I would point out that if they got the windows replaced and a new boiler, they could live in so much more comfort and they would also get PC, council tax rebate etc, worth far more than the interest on their savings, but would they spend it? No.

Better to spend than save 🤔🤣

Pension Credit aims to increase your weekly income to a guaranteed minimum level, which is £227.10 for a single person.

Every £500 of your savings or investments over £10,000 is treated as £1 of income per week,

Say you are single, and have a State Pension of £202 pw (which is the national average) and no other income. That £500 savings counts as £1 of extra income a week making a total of £203 pw.

You could therefore claim £24.10 in Pension Credit bring your income to £227.10.

But, if you had £23,000 in savings i.e. £13,000 more than £10,000, then that £13,000 divided by 500 would count as £26 of extra income a week. Add that to the pension of £202 pw makes £228 pw, which would put you over the limit for Pension Credit.

Try the TurnToUs calculator to try different scenarios.

I guess it means the amount of interest you might expect if your money was in the building society or what ever.

If I had £10,500 I’d probably spend £500 on lots of groceries or keep the money under the bed😬