The impact on benefits when accumulating extra savings
Q. I am 67 and receive my State Retirement Pension with a top up of Pension Credit Guarantee. I am looking to downsize by selling my current property and moving to a smaller house.
The property I am planning to buy will require renovations and I will not be able to move in straight away following the sale of my property and will be living with family for sometime. Even after the purchase of the new property I anticipate I’ll have some substantial savings (which will be used for renovations) before I’m able to move in. Will these savings affect my benefits?
A. Capital released from the sale of your home will only be relevant to your Pension Credit entitlement, your State Pension is based on contributions and is not affected by any savings you have.
For your Pension Credit entitlement current legislation allows the DWP to ignore the proceeds from the sale of a house for up to 26 weeks if you are planning on using the proceeds from the sale to purchase another property. This 26 week period can also be extended if you are not able to move into the new property due to additional factors, such as renovations. You should still disclose to the DWP that you have received the capital from the sale of your home and notify them of your intentions that you intend to purchase a new home and that renovations are required in case the 26 week period may need to be extended.
If you have any savings left from the initial sale after completion of the purchase and all renovation work then you may still be entitled to Pension Credit. Where Pension Credit Guarantee is concerned there is no upper limit for savings you can have. Your savings will generate “tariff income” which will reduced the amount of Pension Credit paid until your Pension Credit entitlement reaches zero. This will vary from person to person. In order to ascertain the threshold in your particular situation you should seek advice. As long as you have entitlement to Pension Credit Guarantee even if this is a few pence you will automatically qualify for other passported benefits such as maximum Council Tax Reduction, help with dental fees, etc.
If your savings and any tariff income arising from the savings disentitles you to Pension Credit Guarantee you may still be entitled to Council Tax Reduction if your remaining savings are below £16,000 and help towards dental, eye tests, etc. would potentially be available under the low income scheme by completing a HC1 form.