Guide to Pension Credit

What is Pension Credit?

Pension Credit is a means-tested benefit for those over State Pension age on a low income. It can provide valuable financial assistance for the elderly.

Pension Credit comes in two parts – Guarantee Credit and Savings Credit. You might qualify for one or both parts.

Guarantee Credit

Guarantee Pension Credit tops up your weekly income to a guaranteed minimum level of:

• £218.15 if you’re single
• £332.95 if you have a partner

If you have a severe disability and get certain benefits, you could get an extra £81.50 a week on top. You will need to be receiving one of these benefits:

• Attendance Allowance
• The middle or highest rate of the care component of Disability Living Allowance (DLA)
• The daily living component of Personal Independence Payment (PIP)
• Armed Forces Independence Payment
• The daily living component at the standard or enhanced rate of Adult Disability Payment (ADP)

If you care for another adult you could get an extra £45.60. You will need to be receiving:

• Carer’s Allowance (or if you’ve claimed Carer’s Allowance but are not receiving it because you get another benefit paying more)
• Carer Support Payment

If you are responsible for children or young people you can get an extra £66.29 for each child (or £76.79 for the first child if they were born before 6 April 2017). Your child must:

• Live with you
• Be under 20
• Be in education or approved training if 16 or over

Savings Credit

If you reached State Pension age before 6 April 2016, you might also qualify for Savings Credit. This gives you extra money if you’ve prepared for your retirement through savings or other income.

You’ll get:

• Up to £17.01 a week if you’re single
• Up to £19.04 a week if you have a partner

Why is Pension Credit important?

Pension Credit can provide income support to help with living costs when you’re retired. Yet figures from the Department for Work and Pensions (DWP) show that up to £2.1 billion of Pension Credit is going unclaimed. On average, this is around £2,200 per year for each qualifying family.

As well as helping you to cover your everyday living costs, claiming Pension Credit can help you get other grants, benefits and discounts. This includes help with health, heating and housing costs.

Who is eligible for Pension Credit?

There are different eligibility criteria for both parts of Pension Credit.

Eligibility criteria

To qualify for Guarantee Credit, you’ll need to have reached State Pension age. This is currently 66 for men and women. You must also live in England, Scotland, Wales or Northern Ireland.

You might also be eligible for Savings Credit if you reached State Pension age before 6 April 2016.

You can claim Pension Credit whether you’re still working or you’ve retired.

Income and assets assessment

You can get Guarantee Credit if your weekly income is less than:

• £218.15 if you’re single
• £332.95 if you have a partner

Your income includes:

• Your State Pension
• Occupational and private pensions
• Most social security benefits (but not social fund payments like Winter Fuel Payment)
• Income from savings and investments
• Earnings

If your weekly income is over this amount, you might still be able to get Guarantee Credit. But one of the following must apply:

• You care for someone
• You have a severe disability
• You have certain housing costs, such as service charges
• You’re responsible for a child or young person who usually lives with you

To get Savings Credit, you’ll need to earn above £189.80 if you’re single and £301.22 if you’re a couple.

Your savings and investments can also affect how much Pension Credit you get. The first £10,000 will be ignored. But for every £500 or part of £500 you have over £10,000 in savings or investments, you’ll be treated as having an income of £1 a week.

Benefits of Pension Credit

Pension Credit offers several benefits for pensioners, so it’s well worth checking whether you qualify.

Financial benefits

Firstly, Pension Credit gives you extra money if you’re on a low income. It’s paid on top of your State Pension. You can use these additional funds to help cover your living costs so that your finances aren’t quite so stretched.

Additional benefits and support

If you get Pension Credit, you can also qualify for additional financial support. The table below outlines what this includes:

How to apply for Pension Credit

You can start your Pension Credit application up to four months before you reach State Pension age. You can also apply any time after you reach State Pension age. But your payments will only be backdated by three months.

Application process

There are three main ways to claim Pension Credit:

1. Online: If you’ve already applied for your State Pension, you can apply for Pension Credit online (or through NI Direct if you live in Northern Ireland). You’ll need to fill in a few details about yourself to get started.
2. Over the phone: You or a friend or family member can call the Pension Claim line on 0800 99 1234 (0808 100 6165 in Northern Ireland).
3. By post: You can print out and fill in the Pension Credit claim form or call the claim line to have a form sent out to you. Once you’ve filled it in, send the form to the Pension Service at Freepost DWP Pensions Service 3.

Required documents

You’ll need to have the following documents and information ready when completing your application:

• National Insurance number
• Information about any income, savings and investments you have
• Information about your pension
• Bank account details
• Information on housing costs, including mortgage interest, service charges and ground rent

If you have a partner, you will need to provide the same information about them.

Where to get help

If you need help with your application, you can phone the Pension Credit claim line on 0800 99 1234. Phone lines are open Monday to Friday, 8am to 6pm.

Alternatively, you can contact an organisation such as Citizens Advice or Age UK for support.

Common misconceptions about Pension Credit

There are several myths surrounding Pension Credit, which could prevent you from making a claim. So, it’s important to understand what’s fact and what’s fiction.

Pension Credit FAQs

How is Pension Credit paid?

Pension Credit is usually paid every four weeks. The payment will go into your bank account or Post Office account. If you don’t have an account, it will be paid through the Payment Exception Service.

How does owning property affect Pension Credit eligibility? You can get Pension Credit whether you own your own home or not. That’s because Pension Credit is based on your income.

Can Pension Credit affect other benefits?

Pension Credit doesn’t count as income when working out whether you can get any other benefits. In fact, you might qualify for more if you claim Pension Credit. For example, you might be able to claim Housing Benefit if you rent.

Note that if you’re getting Universal Credit, this will stop once both you and your partner reach State Pension age.

How quickly can I start receiving Pension Credit after applying?

Pension Credit applications can take a while to process. This means it could be around two months before you receive your first payment. In some cases, it can take even longer.

Summary: Empowering your retirement with Pension Credit

There are several Pension Credit benefits, so it’s worth checking whether you are eligible to make a claim.

Pension Credit is an important retirement income supplement, but it could also mean you qualify for other discounts and savings. These can include a free TV licence, a Council Tax reduction and Housing Benefit – all of which could make your life a little easier in retirement.