Older pensioners with savings exceeding £35,000 can still be eligible for the Winter Fuel Payment, a £300 benefit from the Department for Work and Pensions (DWP). This financial support is available to individuals born before 1959, even if their savings are above the threshold.
DWP Updates Eligibility Criteria After Backlash
In June 2025, the Labour government and DWP updated the eligibility rules following criticism. These changes have expanded access to the Winter Fuel Payment, making around nine million pensioners eligible for the benefit.
Taxable Income – Not Total Savings – Is What Matters
According to Andy Wood from Tax Natives, the key factor in determining eligibility is taxable income, not the total amount of savings. “The government only considers your taxable income, so there are smart ways to manage this,” Wood noted, adding that strategic financial planning could help pensioners both reduce tax and retain benefits.
Interest on Savings Outside ISAs Can Impact Eligibility
Wood explained that many pensioners are unaware that interest from non-ISA savings contributes to taxable income. With interest rates remaining high, even modest savings can push someone over the income threshold for benefits.
Use ISAs to Protect Your Benefit Eligibility
A tax-free Individual Savings Account (ISA) is a powerful tool. Interest earned inside an ISA does not count toward your income calculation and is never taxed. With a £20,000 annual ISA allowance still active in the current tax year, Wood recommends using ISAs to secure eligibility for programs like the Winter Fuel Payment.
Deferring State Pension: Pros and Cons
Delaying your state pension is another strategy, but it comes with trade-offs. While deferring increases your future payments by 5.8% per year, it could also push you into a higher tax bracket, potentially disqualifying you from certain benefits. Wood advises caution: “You’ll be giving up nearly £12,000 annually at current rates if you qualify for the full new state pension, and it could take years to recover that.”
Conclusion
The Winter Fuel Payment remains accessible even for pensioners with significant savings, as long as their taxable income is managed wisely. Using ISAs and considering the timing of your state pension can be key to preserving benefit eligibility. Strategic planning and professional advice can make a significant difference.
Frequently Asked Questions
1. Can I still receive the Winter Fuel Payment if I have over £35,000 in savings?
Yes. The DWP considers taxable income, not total savings. Using ISAs can help shield interest income from being counted.
2. What is the current value of the Winter Fuel Payment?
The Winter Fuel Payment is worth £300 for eligible pensioners born before 1959.
3. How can I reduce my taxable income to stay eligible?
Consider holding your savings in ISAs, which offer tax-free interest, and explore timing options for claiming your pension.
4. Is deferring my state pension a good idea?
It can increase your pension by 5.8% per year, but you may lose other benefits or face higher tax rates. Evaluate the trade-offs carefully.
5. When should I open or contribute to an ISA?
You should do so within the current tax year to make use of the £20,000 allowance, especially before any changes are introduced.