Pensioners issued warning over £10,000 winter fuel payment rule
Winter fuel payments are available for state pensioners who also claim Pension Credit, with the government planning to review the eligibility criteria for the payment this year
This year, winter fuel payments are due for a revamp as the government has confirmed it will reassess the eligibility criteria for the £200 to £300 cash benefit for state pensioners. However, there's a lesser-known rule for claiming this benefit that is unlikely to be modified.
At present, state pensioners who claim Pension Credit are eligible for a winter fuel payment. This is the government's method of means testing the funds. The change, implemented in 2024, was criticised by some as overly restrictive, prompting last month's announcement that the eligibility criteria might be revised for winter 2025. However, one limitation remains intact - the £10,000 rule for Pension Credit.
State pensioners can claim Pension Credit if their weekly income is less than approximately £227.
For those receiving the old basic state pension - which pays a maximum of £176.45 per week, even with a complete National Insurance record - it could boost your weekly income to nearly 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), reports the Express.
However, there's another eligibility criterion besides weekly income: savings. If your savings exceed £10,000, your Pension Credit eligibility will be reduced by £1 for every £500 of savings you have above the £10,000 threshold.
The UK government's official website clarifies: "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."
This implies that excessive savings can make you ineligible for Pension Credit, which in turn may disqualify you from receiving a winter fuel payment (since claiming Pension Credit is a requirement for the winter fuel payment).
While there's no absolute cap on savings, take for instance someone with £110,000 saved: that puts £100,000 of their savings above the £10,000 threshold. Since £100,000 equates to 200 lots of £500, one's eligibility would be based on a deemed £200 weekly income.
Combining this with a state pension of £176.45 per week, the total comes to £376.45 – surpassing the threshold for Pension Credit and thereby also forfeiting entitlement to a winter fuel payment.
Of course, individual circumstances vary, such as different amounts of state pension (dependent on your National Insurance record), personal savings, and other forms of income.
It's worth noting that not all types of income are included in this assessment.
For instance, Attendance Allowance, Personal Independence Payment (PIP), Disability Living Allowance, certain Department for Work and Pensions (DWP) benefits, as well as adoption or fostering allowances, a dependant child's income, and payments like the Scottish Carers Allowance Supplement, are exempted from consideration.
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