Pension Credit is a
means-tested social security benefit introduced on 6th October 2003
and administered by the Pension Service. It is designed to
provide those over qualifying age (see below for
definition) with a minimum level of income and give extra cash
to those aged 65 and over with modest incomes who have made savings
for their retirement.
Pension Credit has two parts to it - the Guarantee Credit and
the Savings Credit. It is possible to receive either component of
Pension Credit exclusively or a combination of both.
Guarantee Credit
The Guarantee Credit element provides a guarantee of a minimum
level of weekly income for single people (£137.35) and
couples (£209.70). The individual applying must be over the
qualifying age (see below for definition), although their spouse
can be younger.
Qualifying Age
Before 6 April 2010, the qualifying age for Pension Credit was
60.
From 6 April 2010, the qualifying age for Pension Credit is
rising gradually to age 65 (and then later to 66, 67 and 68). Click here to use the Government's retirement
calculator and check when you can claim Pension Credit.
Saving Credit
The Savings Credit element is somewhat more complicated but
essentially it is a reward for those who have attempted to make
additional provision for their retirement over and above the Basic State Pension (BSP) and who
have a modest amount of income or savings. Savings Credit is
payable from age 65. Either one or both individuals (in a couple)
must be aged at least 65 in order to claim.
People are likely to be entitled to get some money from the
Savings Credit element if the money they have coming in is up to
£188.65 a week (single) or up to £277.42 a week (for
couples). Savings Credit is currently worth up to £20.52 a
week for a single person (£27.09 for couples).
Some may still be entitled to Pension Credit if their weekly
income is more then the above thresholds if they or their spouse
are severely disabled, look after someone who is severely disabled
or have certain housing costs (e.g. mortgage interest
payments).
As Pension Credit is means-tested, all forms of income, earnings
and savings (capital) are taken into account. The first
£10,000 of capital/savings will be ignored. For
capital/savings over £10,000, the Pension Service will deem
people to have an income of £1 a week for each £500 or
part of £500 over that amount. The threshold was
£6,000 before November 2009.
Claiming
You can claim Pension Credit whether or not you are working, and
do not need to have paid National Insurance
contributions to get the benefit.
Claims for Pension Credit made on or after 6th October 2008 will
only be backdated for payment by up to 3 months.
Individuals can call the Pension Credit application line on 0800
99 1234 (free phone) between 8am - 8pm, Monday - Friday and 9am -
1pm on Saturdays. Alternatively, they can download an application form by clicking
here.
Note that from April 2011 if you are in receipt of Pension
Credit and you (or your partner) have also deferred
your state pension then you will not qualify for deferment
increases on your state pension. For more information please see
our section on
State Pension Deferral.
Getting a Pension Credit Estimate
The Pension Credit calculation is not only complicated but
lengthy as well. So we would not recommend trying to work out
your potential entitlement yourself. The Pension Service has set up
a calculator on their webpage which will allow individuals to input
details of their finances in order to get a Pension Credit and
Savings Credit estimate. The calculator can be found on the
DirectGov webpage here:
Get a Pension Credit Estimate
Q & A's
If you are over the qualifying age, then you can apply for the
Pension Credit, which could supplement your State and other
pensions. If you have not yet retired then you should look into the
possibility of paying into a private pension or a pension with your
employer if they offer one.
