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What is Pension Credit?

What is Pension Credit?
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Pension Credit is a benefit for older persons on a low income. However, like many other benefits, many people don’t claim this benefit. They are not aware of how it works or whether they are eligible.

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To help you understand Pension Credit, here’s useful guide that explains what it is, how it works and who is eligible.

What is Pension Credit?

Pension Credit is an income-related benefit for individuals over state pension age who are on low income. Pension Credit top ups your income and brings it to a specific minimum amount.

It is usually paid every four weeks directly into your bank, building society, or credit union account or a payment exception service if you cannot open or manage any of these accounts.

How much can you get?

Pension Credit has two elements: Guarantee Credit and Savings Credit.

Guarantee Credit

Guarantee Credit tops up your weekly income if it’s below £173.75 (for single people) or £265.20 (for couples). 

These amounts might, however, be higher (and you can therefore get more Pension Credit overall) if you have severe disabilities, certain housing costs (like mortgage interest payments) and caring responsibilities (such as care for a child or a disabled person).

Savings Credit

Savings Credit is an extra payment you can receive if you have saved some money towards your retirement. This could be achieved either by saving money or with a private pension. To qualify, you must have reached state pension age (or have a partner who reached state pension age) before 6 April 2016.

The amount you can get is dependent on whether you meet the ‘savings credit threshold’, which is a minimum weekly income of £150.47 if single and £239.17 if you are part of a couple. For each £1 that exceeds this weekly income, you will get 60p in savings credit up to a weekly maximum limit which is £13.97 if you are single and £15.62 if you are part of a couple.

It is worth noting that any savings above £10,000 will affect the total Pension Credit you can get. For every £500 above £10,000, you will be treated as having an extra income of £1 per week. 

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To work out just how much you can get, you can use the government’s official pension credit calculator.

Who is eligible for Pension Credit?

To be eligible for Pension Credit:

  • You must live in England, Scotland, Wales or Northern Ireland.
  • You must have reached state pension age (check the age that applies to you using the gov.uk’s state pension age calculator).
  • As of 15 May 2019, if you are in a couple, both you and your partner must have reached state pension age or either you or your partner must be receiving housing benefit for people over state pension age.

If you were already receiving Pension Credit before these recent rule changes, you will not be affected even if your partner is below the required age. You will continue receiving Pension Credit unless there is a change in your circumstances (e.g, if your income goes up).

If you lose your eligibility for Pension Credit, you won’t be able to access it again until you are eligible under the most recent rules. Also, if you are single and getting Pension Credit and then marry a partner who is below state pension age, you will no longer be entitled. You can, however, start getting it again once your partner reaches the required age.

Alternatively, in both cases, you can consider applying for Universal Credit instead.  

How can you apply for Pension Credit?

The easiest way to apply is to call the Pension Service on 0800 731 0469. They will fill out the application for you over the phone. You will need the following details to hand:

  • National insurance number
  • Bank account details
  • Details about your income, savings and investments

You can also apply online on the gov.uk website if you already claimed state pension and if no children or young people are included in your claim.  

If for any reason you cannot claim by phone or online, consider asking a relative or even a local voluntary organisation such as Citizens Advice to help you out. 

Keep in mind that the earliest you can claim Pension Credit is four months before you reach state pension age. If you have reached pension age and are already eligible, your claim can be backdated for up to three months. You will receive three months of Pension Credit in your first payment.

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