Pension Credit: are you missing out on £3,900 annual payment?

An estimated 880,000 pensioners are missing out on Pension Credit, worth an average £3,900 a year. We explain who is eligible (you may be surprised) and how to claim.

Older couple looking at laptop
More than a third of eligible households who were entitled to receive Pension Credit in 2021/22 did not claim
(Image credit: © Getty Images)

An estimated 880,000 households eligible for Pension Credit are failing to claim it, according to government figures.

And even those who do claim it may not be receiving as much money as they should.

Pension Credit is one of the most under-claimed and misunderstood benefits. 

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It averages £3,900 a year, but could be worth much more to certain households. It also unlocks access to other benefits, such as cold weather payments, and help with NHS costs. 

Some pensioners who receive Pension Credit may be missing out on extra money, due to not updating their financial information with the Department for Work and Pensions (DWP).

For example, if their savings reduce they could be entitled to a higher amount of Pension Credit.

Figures released last month reveal that the DWP could be paying out an extra £80 million if it had up-to-date information about claimants.

In addition, almost 900,000 households (880,000) who were entitled to receive the benefit in 2021/22 did not claim, meaning up to £2.1 billion of available Pension Credit went unclaimed.

This works out as more than a third (37%) of eligible households failing to receive Pension Credit.

Minister for Pensions Paul Maynard said: "Anyone who is unsure whether they or a loved one is entitled to Pension Credit should quickly check using our online Pension Credit calculator – it’s never been easier."

What is Pension Credit?

Pension Credit rose 8.5% in April 2024, thanks to the state pension triple lock.

Pension Credit helps boost what pensioners get in retirement by topping up their incomes to at least £218.15 a week if they’re single, or £332.95 for couples. 

It is separate from the state pension, and paid to people of state pension age on low incomes, even if they have savings, a personal or workplace pension, or own their own home.

It is made up of two parts: guarantee credit and savings credit. The former tops up your pension income to a certain level, and is available to those on low incomes. 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 Pension Credit will only provide a small amount of money to you, it’s worth claiming as it means you will qualify for other benefits:

  • Support for mortgage interest (SMI) if you own the property you live in
  • Housing benefit if you rent the property you live in
  • Council tax reduction
  • A free TV licence if you’re aged 75 or over
  • Help with NHS dental treatment, glasses and transport costs for hospital appointments
  • Cold weather payments
  • Warm home discount
  • Christmas bonus (only for those who receive the guarantee element of Pension Credit)
  • A discount on Royal Mail redirection service for those moving home

Why aren't people claiming Pension Credit?

Pension Credit is one of the most misunderstood government benefits, with a complex eligibility criteria.

Some pensioners assume that if they own their own home they won't qualify - but this is incorrect, as they may be entitled to claim it.

If they have savings or a pension, they may also qualify for Pension Credit. 

The government has run an awareness campaign in recent years to encourage more people to claim the benefit.

A Freedom of Information request shows that the number of people claiming is starting to increase.

The number of Pension Credit claims awarded rose to 143,031 in 2022/23 compared to just 81,519 in 2021/22, according to figures obtained by the wealth manager Quilter.

Jon Greer, head of retirement policy at Quilter, comments: “Major government-backed campaigns like the one mounted over the past couple of years can have a huge impact on awareness, and it is very encouraging to see so many more people being awarded with Pension Credit.

"Unfortunately, despite this increase, there will still be hundreds of thousands of pensioners able to claim but not doing so."

Those already claiming should remember to update the DWP about any changes to their circumstances or with their financial assets.

While more people may now be in receipt of Pension Credit, the number of claimants receiving the right amount of money seems to have fallen.

The proportion of claimants being underpaid was 1.5% in 2023-24 (a total of £80 million), compared to 1.1% in the previous year. Pensioners failing to inform the DWP about reductions in their financial assets was the largest source of Pension Credit "unfulfilled eligibility".

Stephen Lowe, group communications director at retirement specialist Just Group, said: “Benefits like Pension Credit are a valuable financial resource for retirees on low incomes or for those who are disabled, are carers, or have dependents.

“So, to see that eligible pensioners missed out on £80 million of extra income in 2023-2024 due to submitting inaccurate information is deeply frustrating for everyone.

“The money is there to support the people who need it most, and although the application process can be lengthy, we strongly encourage people to persevere.”

How much is Pension Credit worth?

Pension Credit tops up a pensioner’s weekly income to £218.15 if they are single (or £11,344 a year) in the current tax year. For those with a partner, the joint weekly income is topped up to £332.95 per couple (£17,313 a year). 

But you may be entitled to extra amounts if you have other responsibilities and costs.

For those with a severe disability, a further £81.50 a week is available. You must get one of the following benefits to qualify:

  • Attendance allowance
  • 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 £45.60 a 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 the carer’s allowance, you can both receive this extra amount.

For those responsible for a child or young person, you could get a further £66.29 a week (which increases to £76.79 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 final top-up helps with housing costs. An extra payment may be made to cover ground rent if your home is leasehold, or to cover service charges.

The above payments are all known as "guarantee credit", and form one element of Pension Credit.

The other part of Pension Credit is savings credit, which is worth up to £17.01 a week if you’re single, or up to £19.04 if you have a partner.

Who is eligible for Pension Credit?

You must live in England, Scotland or Wales and have reached state pension age (currently 66) to be eligible for Pension Credit.

When applying for guarantee credit, your income is calculated; if you have a partner, your joint income will be calculated.

The 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, winter fuel allowance, 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 income a week. So, if you have £11,000 in savings and shares, this counts as £2 income a week.

If your income is below £218.15 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 £332.95, it will be topped up to that level.

The criteria to claim savings credit is different. You can only access it 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; however, 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.

The eligibility criteria are complicated, and is likely to be one of the reasons why many pensioners don’t bother claiming.

You can use the government’s pension credit calculator to work out if you can claim and how much you’ll get. You’ll need to have details of your earnings, benefits, pensions, savings and investments. If you get stuck, call the helpline on 0800 99 1234 (Monday to Friday, 8am to 6pm). 

Claiming Pension Credit

You can apply for Pension Credit in several ways. Options include applying online on the government website, phoning the helpline (0800 99 1234), or submitting an application by post.

If you haven’t reached state pension age yet, you can still apply up to four months before this date.

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 too.

The uptick in people applying for Pension Credit has also seen an increase in the number of pensioners being turned down. According to Quilter, the government refused 95,515 claims in 2022/23, representing a 231% spike on the previous year.

You can ask the Pension Service to look at your claim again if you think a decision about your Pension Credit is wrong. Asking them to change their decision is called a "mandatory reconsideration". It’s free to do and you don’t need to use a solicitor.

Quilter says some of the reasons for a claim being refused include having too much income, not being a UK resident, failure to provide all requested information, not claiming on time and not being the right age.

Ruth Emery
Contributing editor

Ruth is an award-winning financial journalist with more than 15 years' experience of working on national newspapers, websites and specialist magazines.

She is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times. 

A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service. 

Outside of work, she is a mum to two young children, while also serving as a magistrate and an NHS volunteer.