What is pension credit?



Posted on: 28th May 2019

Pension credit is an income-related benefit for those over the state pension age. It is available to single pensioners, including widows and widowers. According to the government, almost 4 million people are eligible for pension credit, but only two-thirds claim it. Even if you are only entitled to a small amount of pension credit, it’s still worth claiming as you may also qualify for other benefits.

How much is pension credit?

This comes down to your circumstances, but it can be anything up to thousands of pounds a year. Pension credit comes down to your guarantee credit and savings credit.

Guarantee credit

This is for single pensioners with a weekly income (including pension) below £167.25. Pension credit will top you up to meet this number. If you have a partner and a joint weekly income below £255,25, it will top you up to this number. When applying for guarantee credit, the government looks like your total income, and any savings/investments over £10,000, before making a decision.

Savings credit

This is a reward for those with a modest income who have saved for retirement. Most people who reach the state pension age on or after 6th April 2016 aren’t eligible for savings credit. However, if you were receiving it up to this date or are in a couple and one of you reached the state pension age before this date, you can continue to receive this credit. It just means that the couple cannot make a new claim if the second person meets the state pension age after this date. You also won’t be able to claim again if you have stopped being eligible for any reason.

To qualify, you must have a minimum weekly income of £144.38 if you’re single and £229.67 if you’re a couple. For every £1 your income exceeds the savings credit income, you receive 60 savings credit up to the weekly maximum of £13.73 for a single person and £15.35 for couples. If your income is less than or equal to the savings credit threshold, you will not be eligible.

How do I qualify for pension credit?

To qualify for pension credit, you must live in the UK and reached the state pension age. For extra savings credit, you must have reached the age of 65 if you are male and 63 if female, before 6th April 2016. If in a partnership, you must have both reached the state pension age by that date.

Special rules and two important exceptions for couples

Couples can now only start claiming if BOTH partners have reached the state pension age. Those of mixed ages must instead claim universal credit, which is worth much less for many people. An exception to this is if one partner has reached the state pension age and is claiming housing benefit for the couple. In this case, they can claim pension credit. Mixed-age couples (where one partner has reached the state pension age before 15th May, but the other is still of working age) can have until 13th August to make a claim under the old pension benefit rules. However, it is important that they request their claim to be backdated.

Receiving pension credit

The quickest way to claim pension credit is to call the Pension Service on 0800 99 1234. It will even fill in the application form for you.

You will need:

  • Your national insurance number
  • Information about your income, savings and investments
  • Your bank account details

If you cannot claim by phone, you can make a paper application instead. You can get a friend or family member to call the helpline to ask for a paper application.

The earliest you can begin your application is 4 months before you reach the pension credit qualifying age. Though you can claim after you have reached the pension credit age, you can only backdate your claim by 3 months.

Backdating a claim

The Department for Work and Pensions (DWP) says that when people apply for pension credit or pension-age housing benefit, they can request for their claim to be backdated. Claims for both of these can be backdated by up to three months, provided you have been entitled to the benefits at the earlier date. You needn’t fill in a separate form, you can simply ask over the phone when you apply. If you apply by post, you can make a note of your backdate request on the application form.

Understand your pension better with Haven IFA

If your pensions and investments often overwhelm you, don’t worry. An independent financial adviser is just what you need to make things clear. To learn more, get in touch with Haven IFA to see how we can help prepare you for a comfortable financial future.