Almost 500,000 pensioners will be up to £8 a week better off from tomorrow, when changes to pension credit come into effect.

The Department for Work and Pensions (DWP) will now ignore the first £10,000 of a pensioner’s savings when assessing eligibility for credits. It previously discounted just the first £6,000 of savings.

Angela Eagle, minister for pensions, said: “These changes mean that more people who have done the prudent thing and saved for their future will be rewarded.” The increase in the capital threshold to £10,000 also applies to housing benefit and council tax benefit.

The DWP said some 450,000 people would see an increase in their entitlement, while 20,000 would become eligible for pension credit for the first time.

This new system means that for each £500 of “capital” over £10,000 that a pensioner has, which includes savings and investments, benefits will be reduced by £1.

Those who already receive pension credit do not need to do anything as the change will be calculated automatically. However, charities have criticised the government for requiring pensioners to apply for credit, meaning that as many as one in three misses out.

Andrew Harrop at Age Concern said: “The change should encourage more older people on modest incomes to check whether they may be missing out on financial help that is rightfully theirs.”

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