Thousands of benefit claimants across the UK could be at risk of losing their financial support if they exceed strict savings limits set by the Department for Work and Pensions (DWP). Understanding these rules is crucial to avoid unexpected cuts to essential payments.
What Are the Current DWP Savings Limits?
The DWP applies different thresholds depending on which benefits you receive:
- Universal Credit: Claimants with £6,000-£16,000 in savings face reduced payments
- Other means-tested benefits: Similar £6,000-£16,000 thresholds apply
- Pension Credit: The upper limit rises to £10,000 before reductions begin
How Savings Affect Your Benefits
For every £250 (or part thereof) above the lower threshold, the DWP assumes you earn £1 per week in 'tariff income'. This imaginary income reduces your benefit entitlement pound for pound.
Those with savings exceeding £16,000 (or £10,000 for Pension Credit) typically lose eligibility completely, unless they qualify for disability benefits with different rules.
What Counts as Savings?
The DWP considers:
- Cash in bank accounts
- Investments (excluding pensions)
- Property (other than your main home)
- Valuable possessions that could be sold
Certain lump sums like personal injury payments may be disregarded for up to 52 weeks.
Tips for Managing Your Savings
- Check your total savings regularly against the thresholds
- Consider paying off debts (mortgage payments don't count as savings)
- Explore ISAs or pensions which may be treated differently
- Seek professional advice before making significant financial changes
With the cost of living crisis continuing, understanding these complex rules could make the difference between maintaining or losing vital financial support.
