Skip to Content
Back to A-Z Help pages index

Savings: rules in pension age benefits

This page provides information on how savings and capital affect your benefit entitlement if you qualify for pension age benefits. Because of changes to state pension age when you count as 'pension age' is increasing gradually.

If you are in a couple your eligibility for pension age means-tested benefits is usually determined by the age of the younger person in the couple. This rule was reversed on 15 May 2019 as it used to be the age of the older member of a couple that determined whether they qualify.

If you (and your partner) have total savings and capital of £10,000 or less you do not need to enter this amount as the first £10,000 of savings is ignored, this is called the lower capital limit. If your total savings are over £10,000 please enter the total amount of savings you and your partner have and the calculator will automatically work out how much of it will count as income.

If you have more than £16,000 in capital, the upper capital limit, then you will not be entitled to Housing Benefit or Council Tax Support unless you also receive the Guarantee Credit part of Pension Credit.

PLEASE NOTE THAT THE CALCULATOR USES THE GOVERNMENT'S FORMULA FOR CALCULATING INCOME FROM SAVINGS. The amount we calculate is not meant to represent the amount of income you actually receive from your savings.

If you qualify for pension age benefits the government assumes you receive £1 per week for every £500 of savings (or part of £500) you have above £10,000.

Items counted in full include:

  • cash;
  • money in bank or building society accounts, including current accounts that don’t pay interest;
  • money in a Tax Free Childcare account (enter 80% of value)
  • National Savings accounts and certificates;
  • income bonds;
  • stocks and shares;
  • property (other than your own home);
  • Premium Bonds;

Note that any actual income these assets generate is ignored.

How capital is valued

Your capital is generally valued at its current market or surrender value less 10% if there would be costs involved in selling and less any debt secured on the property.

Jointly owned capital

If you own capital jointly with other people you would normally be assessed as having an equal share.

Items that are disregarded capital include:

  • your home
  • the value of any property occupied by some who is a 'close relative' if they have reached pension credit qualifying age or are 'incapacitated'
  • the value of a property for up to 26 weeks if you have acquired it to live there, you are trying to sell it, you are carrying out essential repairs or alterations in order to live there, or you are taking legal advice so that you can live there
  • the value of a former home for up to 26 weeks if you have left because of a relationship breakdown (or indefinitely if your former partner lives there and is a lone parent)
  • sale proceeds of your home for up to six months if you intend to buy another home
  • money from insurance claims for up to six months if used to replace or repair
  • money such as a loan or grant to pay for essential repairs or improvements

Other disregards include:

  • your personal possessions such as jewellery, furniture or a car
  • your business assets
  • any life insurance policy which has not been cashed in
  • the value of a pre-paid funeral plan
  • any charge for currency conversion if your capital is not held in sterling
  • any Social Fund grant payments
  • arrears of certain state benefits
  • a lump-sum payment received because you deferred drawing your state pension for 52 weeks or more
  • certain compensation payments

If you deprive yourself of capital in order to increase the amount of benefit you get you can be treated as if you still had that capital, this is called ‘notional capital’. This might occur if you give money away to members of your family or buy expensive items in order to reduce your capital.

You will not be considered to have deprived yourself of capital if you have paid off debts or used money for ‘reasonable’ spending on goods and services.

If you are refused benefit because of notional capital you should seek advice and consider appealing against the decision.