Do Premium Bonds savings affect your standing with the Pensions Department?
Q: My husband and I are both on Guaranteed Pension Credit and are extremely grateful to receive it. We have always lived very carefully and frugally. From time to time, when we have managed to save some money, we have purchased Premium Bonds, as a safe haven, and very occasionally have won a £25 prize, which we have re-invested.
We would like to know if this will jeopardise our standing with the Pensions Department if the total reaches more than about £15,000.
We have not had funds from any other source, the bonds have only been purchased from a small excess of an occasional benefit payment.
We would hate to have to cash in the Premium Bonds, but will do so if your reply indicates that the Pensions Department would cancel our Guaranteed Pension Credit - we could not live without it.
A: When you were awarded Pension Credit you would have been given an “assessed income period”. This means that during the time stated (normally any time up to 5 years) you do not need to report to the Department of Work and Pensions any change in your circumstances.
Unfortunately you do not say how old you are. People who are over 75 may be given an indefinite assessed income period, meaning they will probably never be re-assessed. Everyone else will be re-assessed at the end of the period they have been allocated and are legally obliged to disclose how much they hold in savings.
It doesn't matter where the money is invested (be it in Premium Bonds, a savings or a current account, or even under the mattress), if you have more than £10,000, then for every £500 (or part thereof) you have above this threshold, the DWP adds £1 to your weekly income figure. So, when your Pension Credit comes up for reassessment, if you have £15,000 worth of savings in whatever form you will be judged to have an additional £10 a week (£5,000 – the difference between the amount of your savings and the threshold of £10,000 allowed – divided by £500 = 10) and this will impact your Guaranteed Pension Credit amount.
There’s a table here showing how capital you hold may be treated as “deemed income” when Pension Credit is being assessed.
If you are finding it hard to make ends meet you should check that you are receiving all the benefits that you are entitled to. Call in at your local Citizen's Advice centre or contact Turn2Us, which can help you calculate if there is anything else you might get.
* Read Annie Shaw's money articles every month in Saga Magazine.