Savings & Capital Rules for the over 60's
It is important to check how your savings and capital might affect your benefit entitlement if you qualify for 'pension age' benefits. You can check your state pension age by using the government calculator, the current pension age is under review and is likely to increase.
If you are in a couple your eligibility for pension age means-tested benefits is based on the age of the youngest person in the couple.
Savings and Capital Limits
Lower Capital and Savings Limit
If you (and your partner) have total savings and capital of £10,000 or less the first £10,000 of savings is ignored, this is called the lower capital limit.
Upper Capital and Savings Limit
If you have more than £16,000 in capital, this is referre to as 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.
Assumed Income from Savings over the Lower Capital and Savings Limit
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.
What counts as Capital and Savings?
Items counted in full include:
- 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
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.
Disregarded Capital and Savings
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
Spending (Deprivation) of Capital and Savings
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 and non-eseential 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, you might be asked to produce evidence such as receipts for purchases made.