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Are you missing out on Pension Credit? How to claim the benefit worth £4,500 a year
Hundreds of thousands of eligible households are still failing to apply for Pension Credit. We explain who qualifies for the benefit and how to apply.
Hundreds of thousands of pensioners are missing out on a benefit that can help with the cost of living by topping up incomes.
Pension Credit, a means-tested benefit for people who have reached state pension age and are on low income, is worth £4,500 a year on average, although you could receive more or less than this.
In essence, it’s a top-up for pensioners on a low income to ensure they get a minimum amount.
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Pension Credit is separate from the state pension. It is made up of two parts: 'guarantee credit' and 'savings credit'.
The former tops up your pension income to a certain level. The latter is only available to those who reached state pension age before 6 April 2016 and had some money saved for retirement, for example in a personal or workplace pension.
Even if your Pension Credit entitlement is small, it’s still worth claiming if you’re eligible as it can unlock a host of other benefits, such as:
Christmas bonus (only for those who receive the guarantee element of Pension Credit)
A discount on Royal Mail redirection service for those moving home
How much is Pension Credit worth?
The Pension Credit guarantee credit part tops up a pensioner’s weekly income to £238 if they're single. For couples, it’s £363.25.
You may be entitled to extra amounts, also known as guarantee credit, if you have other responsibilities and costs. For those with a severe disability, a further £86.05 per week is available. If both members of a couple qualify, the rate is £172.10 per week. You are classed as having a disability if you receive one of the following benefits:
The middle or highest rate from the care component of Disability Living Allowance
The daily living component of Personal Independence Payment (PIP)
Armed Forces Independence Payment
Daily living component of Adult Disability Payment (ADP) at the standard or enhanced rate
If you care for another adult, you could receive an extra £48.15 per week, provided you get Carer’s Allowance (or you’ve claimed Carer’s Allowance but are not being paid because you receive another benefit that pays a higher amount). If you and your partner have both claimed or are currently receiving Carer’s Allowance, you can both receive this extra amount. It is known as the Carer’s Addition.
For those responsible for a child or young person, you could get a further £69.98 a week (which increases to £81.07 a week for the first child if they were born before 6 April 2017). The child or young person must normally live with you and be aged 19 or younger. If the child or young person is disabled, you may get another payment.
The savings credit part of Pension Credit is worth up to £17.96 a week if you’re single, or up to £20.10 if you have a partner.
Depending on your circumstances, you may be eligible for both parts of Pension Credit.
You must live in England, Scotland or Wales and have reached state pension age. When applying for guarantee credit, your income is calculated; if you have a partner, your joint income will be calculated.
The Department for Work and Pensions (DWP) defines income as your state pension and other pensions (even if they’ve been deferred), earnings from a job or self-employment, and most benefits.
However, not all benefits are counted as income. Attendance Allowance, Child Benefit, Disability Living Allowance, Personal Independence Payment, Housing Benefit, council tax reduction and the Christmas bonus are excluded.
Your savings and investments are also taken into account, which includes shares and any property you own (apart from the home you live in). If you have £10,000 or less, this will not affect your eligibility for Pension Credit.
If you have more than £10,000, every £500 over £10,000 will count as £1 of income a week. So, if you have £11,000 in savings and shares, this counts as £2 of income a week. If your income is below £238 a week then guarantee credit will top you up to that amount. If you’re claiming as a couple and your weekly income is below £363.25, it will be topped up to that level.
The eligibility criteria for savings credit is different. It is available if you reached state pension age before 6 April 2016, and you have some savings and/or a private pension. There isn’t a savings limit, but if you have over £10,000 in savings, this will affect how much you receive. You might still get some savings credit even if you do not get the guarantee credit part of Pension Credit.
How to claim Pension Credit
You can apply for Pension Credit in several ways. You can apply online on the government website or by phoning the helpline (0800 99 1234). You can also submit an application by post. You can apply up to four months before reaching state pension age.
You’ll need your National Insurance number when you apply, plus information about your income, savings and investments. If you have a partner, you’ll need the same details about them.
If you apply for Pension Credit and your claim is turned down, you can ask the Pension Service to look at your claim again if you think the decision is wrong through what’s known as a ‘mandatory reconsideration’. It’s free to do and you don’t need to use a solicitor.
Your application may be refused if your income is too high, you’re not a UK resident, you’re too young or you don’t provide all the requested information on the application.
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