Pension credit is a means tested benefit for those on a low income who have reached the Pension credit qualifying age. It has been estimated that around 4 million people are entitled to boost their state pension with pension credit – but one in three don’t make a claim. This results in more than a million people having to struggle with their finances when they could be paid some extra cash tax-free. Thus, if you are struggling to make ends meet, claiming pension credit might help. The government says 90% of claims are successful and you can make a claim if you own your own home. You can use this guide to see if you qualify and find out how much you might be paid. The payment is made up of two elements – guarantee credit and savings credit, although savings credit is no longer available to anyone reaching state pension age from April 6, 2016
Claiming Guarantee Credit
Guarantee credit is a tax-free state pension top-up for individuals and married couples who have an income below the minimum set by the government.
To qualify claimants must:
Live in the UK
Women must have reached state pension age
Men must have reached the state pension age of a woman born on the same day as them
Have a weekly income of less than £163 if single or £248.80 if in a couple
You can check when you are entitled to pension credit using an online calculator from the Department of Work and Pensions (DWP).
Applying for Guarantee Credit
The guarantee and savings credit may vary between claimants. To help estimate the payment, the DWP has an online pension credit calculator.
To work the amount out, you will need to know:
- How much income you have from earnings, benefits and pensions
- How much you hold as savings and investments
When you apply, the government adds up your weekly income from the basic and additional state pension, any private pension income, money you earn from working and looks to see if you have savings of more than £10,000.
Housing benefit, council tax reductions and attendance allowance are not included.
The value of any personal possessions and your home are excluded as well.
If you are one of a couple, you will need the same details for your partner.
You cannot use the calculator if you have delayed taking your state pension, own two or more properties or if you are self-employed.
How much is Guarantee Credit?
If you do qualify for guarantee credit, your weekly will be topped up to £163 if you’re single or £248.80 if you’re married (or in a civil partnership).
Claiming Savings Credit
Savings credit for new state pensioners was abolished on April 6, 2016, but you can still claim if you were over your state pension age before that date and have not applied for the payment.
The payment is a reward for putting aside some money for your retirement before reaching state pension age.
Few people reaching state pension age after April 6, 2016 will qualify for savings credit, unless:
They are a couple and the oldest partner had got to their state pension age before that date
They were already paid savings credit before April 6, 2016
If anyone becomes ineligible for savings credit, they are barred from claiming again.
How much is Savings Credit?
You can claim upto 13.40 if you are single and upto £14.99 if you are married (or in a civil partnership)
However, you might not be eligible for this credit if you reach State Pension age on or after 6 April 2016.
Savings credit has no cap for how much you can have as savings or investments, but if you have more than £10,000 set aside, the amount paid will decrease.
Applying for Pension Credit
The easiest way to make a pension credit claim is by telephone.
Someone else can handle the call for you, but you should be with them.
The numbers to call are:
- Telephone: 0800 99 1234
- Textphone: 0800 169 0133
The lines are open between 8am and 6pm Monday to Friday, 8am to 6pm
The claims officer will want to know:
- Your national insurance number
- Details of your income, savings and investments
- Your bank account details
When will I get paid the money?
Pension credit is paid into a bank, building society or credit union account generally every four weeks.
If the payment day is a bank holiday, pension credit is paid on the last working day before the holiday.
Don’t lose money by claiming Pension Credit too late
You could lose money if you delay your claim after you reach the qualifying age for pension credit.
You can claim any time after reaching pension credit qualifying age, but late claims are only backdated for three months.
If you want your claim to start from the first day you qualify, you can claim up to four months before you reach the pension credit qualifying age.
Impact on obtaining other benefits
Claiming pension credit does not stop you claiming other benefits at the same time:
- Most claimants pay no council tax
- Your NHS dental treatment is free, along with extra help towards the cost of glasses and travel to hospital
- You’ll get a £25 cold weather payment if the temperature falls below 0 Centigrade for seven consecutive days
- Housing benefit is available if you rent your home
- Home owners can get help with mortgage interest payments, ground rents and service charges
- Carers may qualify for an extra payment worth up to £34.95 a week
Universal Credit and Pension Credit for new claimants
New benefit rules mean that Pension Credit will be phased out and Universal Credit will take its place, but no date for this change has been announced.
If you claim Pension Credit already, the change will not affect you.
What to do if your circumstances change
Your entitlement to pension credit may change with your personal circumstances. For example, you may become single or move in with someone or you may inherit money that improves the amount you have saved or invested. If this happens, you should tell the Pension Service straight away.
You may also have an ‘assessed income period’, which means you do not have to tell the Pension Service about any personal changes. If you have a pension credit with an assessed income period, the benefit term is open-ended regardless of how your income and savings might change. No new assessed income periods will be set after April 6, 2016.
To tell the Pension Service of changing circumstances, call them on 03456 060 265 and select option 1.
Appealing Pension Credit decisions
If you think your pension credit award is wrong, you can challenge the Department of Work and Pensions to explain why and ask for your case to be reviewed.
The process is called a ‘mandatory reconsideration’ and details of who to contact will be on your pension credit award notice.
The DWP will send you a letter explaining what action they intend to take and why.
If you are still not happy with the decision, you can appeal to a tribunal.
You cannot appeal if you have not asked for a mandatory reconsideration.
For independent, free advice, you can contact organisations like Citizens Advice.