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Time Is Running Out For This Pension Boost

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Published in Retirement & Pensions on 2 September 2008

Millions have gone unclaimed in benefits for pensioners. Are you missing out? Here’s how to get the money you deserve before it’s too late.

For people on a fixed income, rampant inflation is bad news. That’s why rising food, fuel and energy prices are hitting many pensioners particularly hard right now.

If you're struggling to make ends meet, help could be at hand by claiming benefits to top-up your income in retirement. This is known as Pension Credit which is made up of two elements: Guarantee Credit and Savings Credit.  

Guarantee Credit is available to anyone aged 60 and over and entitles you to an income of at least £124.05 a week if you're single and £189.35 a week for couples.  

If you’re living off less than this, you should apply for extra cash from the government which will take your income up to the guaranteed minimum level. So, for example, if you’re single with a weekly income of £90, you'll receive Guarantee Credit worth £34.05.

Savings Credit is available to anyone aged 65 and over who has saved for retirement. Here you may be rewarded with an extra payment of £19.71 a week if you’re single and £26.13 a week if you have a partner. 

How does Pension Credit work?

You can work out how much Pension Credit you’re entitled to using this online Pension Credit calculator. But here’s a quick example:

Let’s say...

  • You are 65.
  • No one else lives with you.
  • You have savings of £5,000.00.
  • You receive the full Basic State Pension of £90.70 a week
  • You receive a private pension of £20.00 a week

In this case, you could be entitled to a Pension Credit payment of £25.05 per week, taking your total weekly income to £135.75.

Now I know this amount isn't enough to allow you to see out the end of your days on luxury cruises and buying holiday homes in the sun. But the point is, if you’re entitled to extra money, you should claim everything you deserve.

At the moment, 2.7 million households receive an average of £50 a week in Pension Credit. But, around £5 billion in benefits is left unclaimed every year. The Department for Work and Pensions (DWP) reckon these common misconceptions are causing people to miss out:

Five myths about Pension Credit

You don't think you'll be eligible for Pension Credit - Don't rule yourself out. On top of the 2.7 million households which are already receiving Pension Credit, up to 1.8 million more could be entitled but haven't claimed yet.

It's difficult to claim Pension Credit - All it takes is one free phone call and you won't have endless forms to fill out. (Call 0800 99 1234 to make your claim.)

You'll get so little it's not worth claiming - Something is always better than nothing. Even if you only get a little extra each month, receiving Pension Credit could help you get money for other things, such as housing benefit, council tax benefit and winter fuel payments.

You have some savings so you won't get anything - Having some savings or another pension doesn't automatically exclude you. In fact, the first £6,000 of savings (or £10,000 for permanent care home residents) has no impact on your eligibility at all*. Around three quarters of people who get Pension Credit have saved something. In fact, you may be rewarded for trying to put money aside for your retirement with Savings Credit payments.

You own your own home so you won't get anything - Owning your own home doesn't discount you either. Almost half of pensioners who get Pension Credit own their own home.

If you’re beginning to think you may be eligible to apply for Pension Credit, then there is some good news: Payments can be backdated from the day you were first entitled to the date you apply. This is up to a maximum period of 12 months.

However -- and this is the important bit -- the rules are changing for the worse next month. From 6 October 2008, the maximum period for backdating Pension Credit payments is being cut from 12 months to just three months. That means, to make the most of missed payments, The Pension Service must receive your application before this date.

Unfortunately, there’s only one month left to make your claim. You better get your skates on!

*Your entitlement to Pension Credit will be reduced by £1 for every £500 in savings you have above these limits.

More: The Way Out Of Pensioner Peril | Pension Credits: What Are They And Are They Any Good? | Don't Rely On Property For Your Pension

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Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

motley222 03 Sep 2008, 7:08am

Like all government credits, these are a way of offering money without giving it. There is a cost of administration (which I suppose also keeps down unemployment) and it requires the potential recipient to know how to claim, and to get round to doing it!
These systems, whilst simple for a Whitehall Mandarin to comprehend, require numeracy of the elderly in their declining years which they never had when at school!
So £5Bn per year goes unclaimed. How surprising, and how convenient for the government.
Why not "cut out the middle man" and just adjust the basic pension? After all, we higher rate tax payers will be giving most of it back anyway.

Dhahran2001 03 Sep 2008, 8:20am

OK - So how does "Savings Credit" work?

There would have been 'enough space' to write - 'more about that in Part 2'.

kgh45uk 03 Sep 2008, 8:35am

I am sick and tired of this type of information, I myself am 63 and have tried on three occasions to claim, having waited for weeks for a reply I contact them and am told that my documents have not been received even though I have received them back in an official envelope the people who give out this information are not in the real world it is no wonder that a lot of elderly people miss out as the departments that deal with the claims are so over officious and incompetent

MontyPorridge 03 Sep 2008, 8:37am

Doubtless the Government will require all sorts of information about you. Such vital information such as
Height, weight, whether bald or not, frequency of marital relations, inside leg measurement, DNA sample (that's a must for the criminal database), have you own teeth, where you last went on holiday, do you pick you nose, do you cut your nails in the bath and a good few other essential and intrusive details.
Why do they demand all this stuff? Because they can and it demonstrates that they are in charge and we are just so much "fodder" for their whims.
You'll gather generally I don't have a high opinion of Governments or their employees.

motley222 03 Sep 2008, 9:10am

I'm the most politest so far!

Any advance?

parkur 03 Sep 2008, 9:30am

Reached 80years 24 Aug & now have an increase
of .80p a week pension to go wild with,big deal!!!. I object to paying my council tax
at the full rate & part of it being past to
the future Olympics Fund. Pensioners should not have to subiside such a fund,many of us will probably not be around 2012. I also agree with a previous subscriber that to
much personal info is required by the Gov.
Why on earth do'nt we get a livable pension
in the first place, I wish I could claim
expenses like our leach like MP's. The one
in my area Feltham is the biggest one of
the lot also his wife.

StanBu 03 Sep 2008, 9:52am

They give with one hand and take away with the other.
My 84 year old aunt received a pension credit of £5.60 per week which she was delighted with, until her housing benefit was reduced by 65% of it and her council tax benefit was reduced by 20% of it, leaving her with the princely sum of just 76p a week. It must cost more than that for three government departments to administer it!!
Why on earth don't they just increase the basic pension and be done with it.

maggieinmarske 03 Sep 2008, 10:02am

Given that I will reach 60 later this month, and taking advantage of my entitlement to retire at that age, I used the web-site to determine in advance my pension expectations, and assumed that Pension Credit would follow automatically. Luckily, someone informed me of the truth, and I used the free-phone number given above. Spoke with a very nice young man who asked the required questions (none too intrusive) and organized that my Pension Credit will be paid into my bank from the Monday after my 60th birthday. This was much easier than applying for Housing Benefit (a 28 page form) or Income Support (which is at the whim of the officer handling your case). Can only advise others to go onto that phone and get in your application. As to it not being a fortune - well, having done the last two years at minimum wage, and since July on JobSeekers Allowance, my income will double - yes DOUBLE - from £60.+ to £124.05 and Housing Benefit and CT Benefit comes along with it by right. I missed this years Heating Allowance by one or two days, but will get it next year. Roll On.

craftygal 03 Sep 2008, 12:06pm

to be fair, unlike hmg, we've found pension credit one of the more straighforward benefits to apply for, at least you can normally get them on the phone - just try the family tax credits number which is always 'queued' - & we find local councils are the ones that require most intrusive info.
just don't try to understand the calcs - they reduce the pension credit 'cos you've got savings then give you a savings credit back.
if you have modest savings then do go for it as it is a passport to other benefits which many pensioners deserve.

Jazzlady100 03 Sep 2008, 1:18pm

My mum is on her own and gets a state pension, plus a small (very small) pension from my deceased father's employers. She also receives housing benefit. A few years ago she applied for Pension Credit. She was a few pence over the limit was not entitled to it. We thought nothing more of it, until the Housing Benefit said she had been overpaid as she was receiving Pension Credit! They asked her to repay approx £480. My mum had months of sleepless nights as she has never owed anyone anything in her life (she doesn't have any savings either). My brother and I appealed against the decision to repay the money on behalf of my mum, who was 80 at the time (83 now). We had to attend a hearing with her and the local Council said she should have KNOWN she was being overpaid housing benefit and should have questioned it. Thing is, she did question whether she was entitled to the amount of housing benefit and was told to "Go away and enjoy it". My mum has never had anything in her life, or owned anything in her life. The stress the local council caused all because of her application for Pension Credit was unbelievable. I think my mum is entitled to Pension Credit now and several people have told her she is, but she is too frightened to apply for it in case the same thing happens again. We won the appeal by the way and she didn't have to repay the money.

supersol42 03 Sep 2008, 2:20pm

Pension Credit is the elephant in the room as regards auto-enrollment in 2012. Millions of working people will suddenly find themselves paying money into a scheme from which they will get not a single penny in net benefit. Millions more will benefit, but only to the extent of a marginal fraction of what they have saved.

keith1942 03 Sep 2008, 4:31pm

paying a greater basic pention might be the logical thing to do the goverment will not do it. the reason is that many senior citizens look at this pention credit as charity and will not accept it while others dont no and will not claim, this will leave billions in goverment coffers money they can save for the next finacial diasaster that will require the tax payer to bail out some other mis-managed fincial organisation

hungary 03 Sep 2008, 5:00pm

When I checked with my elderly neighbours to ensure they claimed everything they were entitled to, they informed me that on a rainy afternoon he saw an ad about pension credits in the newspaper. He phoned the freephone number and within no time all was done by friendly people and now he gets everything he is entitled to. He was very impressed with how easy it was and how friendly the people were.

TREVELYNGOLF 03 Sep 2008, 5:21pm

I have been on benefits for years because I have a serverly disabled wife whom I look after 24/7 with help from various services.
Over the years I have fought the system for help and benefits.
Some I won some I lost.
I had the usual SATURDAY letter in Brown stating that as Im getting near 60 My benefits would change at 60 .
Panic, this usualy means that they are going to reduce our money (last time a lady came after 10 years to make sure we were getting enough money and had a laptop with all the info on it -£50 per week was stopped and nothing had really changed).
So I contacted the number given and I was pleased to hear a friendly voice who stated that I would have to contact them nearer the date and in so doing I had a shock-my money was doubled with out any fuss.
Norman-Gill

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