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Pension Credit

Boost your retirement income with a state top-up

pension credit
Steve Lodge
Steve Lodge and Amy Roberts | Edited by Julie Ball
Updated 6 August 2019

Pension credit is a tax-free benefit aimed at retired people on low incomes. It's means-tested, but for those who qualify it can be worth £1,000s a year. However, an estimated 1.3 million eligible households don't claim the top-up – in many cases because they don't realise they're entitled to it.

By claiming pension credit, you can also qualify for a bevy of other benefits, including council tax reduction, cold weather payments, free dental care and, from June 2020, a free TV licence if you're over 75. This guide tells you what pension credit is, how you make a claim and how much you could get.

Important: The clock is ticking for pensioners with working-age partners to claim pension credit before eligibility rules tighten, which mean some could lose out by up to £7,000 a year. A change from May 2019 means both partners must be of state pension age to claim. However, if only one of you had reached state pension age by 14 May, you can still qualify by applying by 13 August (phone lines close at 7.30pm) and backdating your claim. Crucially, this will secure your eligibility to pension credit going forward.

In this guide

Related guides

State pension guide: Check your entitlement 

Pension need-to-knows: 17 key points for retirement saving

Guide to taking your pension: Pension freedom – drawdown, cash or an annuity?

Pension credit discussion: Let us know your experiences

What is pension credit?

Pension credit is an income-related benefit aimed at people over state pension age (currently rising from 65 to 66 for men and women).

It offers older people a weekly top-up to their income (you can also choose to be paid fortnightly or every four weeks) and is available to single pensioners, including widows and widowers, as well as couples.

According to the Government, more than three million households are eligible for pension credit, but four out of 10 fail to claim the benefit – in many cases because they don't realise they're entitled to it.

To check your full entitlement, phone the pension credit claim line on 0800 99 1234 or use this online tool to find out how much you could get.

If you receive pension credit you can also qualify for other benefits
 

Even if you find out you're only entitled to a small amount of pension credit, it's still worth claiming as it means you can qualify for other benefits:

Additionally, you may be able to get other deals such as a discount on your water bill or a cut-price phone/broadband tariff. South West Water, for example, offers a reduction in water and sewerage charges of up to 50% for people on the guarantee element of pension credit, while Wessex Water gives a discount of around 20%. Meanwhile, the BT Basic phone service charges just £5.10/month for line rental, including a £1.50 call allowance. For BT Basic + Broadband it's just £9.95.month. 

How do I qualify for pension credit? 

The average weekly amount of pension credit received by claimants is £58 – more than £3,000 a year – according to Government figures.

What you get depends on your income, and how much you have saved or invested. If you are in a couple (defined as having a partner who you live with), it's your combined incomes and savings that matter. 

Pension credit has two parts: guarantee credit and savings credit. Guarantee credit is a top-up for those on low incomes. Savings credit is a reward for those with a modest income who have saved for retirement. 

  1. Guarantee credit

    For single pensioners with a weekly income (including pension) below £167.25, pension credit will top you up to £167.25.

    If you have a partner and your joint weekly income is below £255.25, it'll top up your combined income up to £255.25.

    When you apply for guarantee credit, the Government looks at all of your income. This includes both your basic and additional state pension, any income from other pensions, income from any jobs or social security benefits you have, plus any savings and investments above £10,000.

    2. Savings credit

    Savings credit is worth up to £13.73 a week for a single person or £15.35 for couples. 

    To qualify, you must have a minimum income of £144.38 a week if you're single, and £229.67 a week if you're in a couple. For every £1 by which your income exceeds this amount, you get 60p of savings credit – up to the £13.73/£15.35 maximum.

    If your income is less than the £144.38/£229.67 savings credit threshold, you won't qualify.

    Savings credit is only available to people who reached state pension age before 6 April 2016. Single pensioners and couples can still make new claims if they reached state pension age before this date.

    Couples where only one partner had reached state pension age before 6 April 2016 can also retain savings credit if the older partner had reached 65 and qualified for savings credit before that date AND has remained continuously entitled to it since.

    If the couple cease to qualify for any reason, they cannot get it again while still in a couple.    

    You do not make a separate claim for savings credit – entitlement is considered as part of a pension credit claim.  

If you pay mortgage interest or have other housing costs, caring responsibilities, are responsible for a child, or are severely disabled, you may be entitled to more pension credit. Use our guide and universal credit and benefits calculator to get a clearer picture.

How much can you have in savings before it affects pension credit?

Any income from work is, of course, treated normally, so if you earn £10,000 a year, that's what is recorded on your pension file as your income.

When it comes to savings and investments, the situation is a bit more complex and includes any money saved or invested in your name, as well as investment properties (excluding your home).

  • The first £10,000 doesn't count.

    You're allowed to have £10,000 saved without it affecting your pension credit at all. This is a big boon, as the majority of claimants have little more than this saved.

  • Above £10,000.

    Here, it's assumed you earn £1 a week per £500 of savings and investments, which works out at 10.4% interest. This is completely unachievable in any savings account now, and virtually unachievable at any point in recent memory. If it were an investment, it would need to be doing seriously well.

    It can only be presumed that an assumption of a gradual use of capital has been factored into this calculation, plus the initial 'free' £10,000...

Example:

You have savings of £10,800 – £800 above the limit. So the number of £500s of extra savings (or part) is 2, meaning £2 is added to your weekly income.

What if the value of my savings reduces? 

The pounds figure you initially declare for the value of your savings and investments stays on your file and is calculated at that rate going forward unless you let the Pension Service know.

Therefore, if you spend your savings or the value of your investment drops, it's important to notify the Pension Service and have the amount you're entitled to recalculated as soon as possible. You should receive any increase in benefit as soon as your paperwork is processed. You can do this by calling 0800 99 1234.

What else do I need to qualify? 

To qualify for pension credit:

  • You must live in the UK – England, Scotland, Wales, or Northern Ireland.
  • You must have reached state pension age (currently rising from 65 to 66 for both men and women).

To make a new claim for savings credit:

  • Men must have reached 65 and women 63 (the then state pension ages) before 6 April 2016. If you're in a couple, both partners must have reached state pension age by that date. You're treated as a couple if you live together. You don't have to be married or in a civil partnership.

Couples:

For couples, one partner claims and gives income and savings details for both partners. 

New rules for couples – and two important exceptions 

For couples, from 15 May 2019, you can generally only start claiming if BOTH partners have reached state pension age.

'Mixed-age' couples, where only one partner has reached state pension age, now face having to claim universal credit instead – worth much less for many people.

Tens of thousands of people are expected to lose out from this rule change. Charity Age UK calls the change an "age gap tax" which could cost some couples up to £7,000 a year in pension credit, and for those with an age difference of more than five years, up to £35,000 in total.

Importantly, mixed-age couples may be able to make a new claim under the old rules up until 13 August 2019 – but it's crucial that they request their claim be backdated.

A further exception to this rule change for mixed-age couples is where one partner has reached state pension age and is claiming housing benefit for the couple – in which case, they can still put in a new claim for pension credit.

Important: The clock is ticking for pensioners with working-age partners to claim pension credit before eligibility rules tighten, which mean some could lose out by up to £7,000 a year. A change from May 2019 means both partners must be of state pension age to claim. However, if only one of you had reached state pension age by 14 May, you can still qualify by applying by 13 August (phone lines close at 7.30pm) and backdating your claim. Crucially, this will secure your eligibility to pension credit going forward.

Quick questions

When you apply, you must be living in the UK. You must not be subject to immigration control – that is, there must be no restrictions which would stop you receiving financial help from the Government. You will also need to satisfy the habitual residence test.

If you think you're eligible, use our 10-minute universal credit and benefits calculator to see what you're entitled to.

How do I get 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. (In Northern Ireland, phone the Northern Ireland Pension Centre on 0808 100 6165.)

Phone lines for mixed-aged couples to apply for pension credit will close at 7.30pm on August 13

You'll need:

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

You can make a paper application if you're unable to make a claim by phone. You can get a friend or family member to call the helpline to ask for a paper application.

The earliest you can start your application for pension credit is four months before you reach state pension age.

You can claim any time after you reach state pension age, but your claim can only be backdated for three months.

  • What if I'm already getting pension credit?

    You shouldn't need to worry about the recent rule change for mixed-age couples – it doesn't affect existing claimants.

  • What if my circumstances change?

    People who reach state pension age from 15 May 2019 won't be able to apply for pension credit if they have a partner who is still working age.

    There are also some people who could end up losing pension credit they currently claim as a result of the changes. This could happen if:

    • You're a single pensioner and start living with a partner who hasn't reached the qualifying age on or after 15 May 2019. This change in circumstance would mean you'd need to reapply as part of a couple – but after 15 May you'd have to claim universal credit instead.

    • You stop being entitled to pension credit because of a change in circumstances, and become entitled again at any time on or after 15 May, but your partner hasn't reached the qualifying age. Potentially some in this situation could be currently claiming pension credit but end up no longer being able to as a result of the changes. 

  • I'm unhappy with the decision that's been made about my pension credit, can I do anything?

    You can use the GL24 form to appeal the decision about your pension credit if you're unhappy with it and the decision was before 28 October 2013.

    If the decision is after this date, you'll need to ask for what's known as 'mandatory reconsideration' before you appeal – you must usually do this within one month of the date of a decision. See the guidance for help.

How do I backdate a claim?

The Department for Work and Pensions says that when people apply for pension credit or pension-age housing benefit, they can ask for their claim to be backdated.

Claims for both benefits can be backdated by up to three months, provided you would have been entitled to the benefits at the earlier date.

There is no separate form to complete – you can ask over the phone when you apply or, if you apply by post, put on the application form that you want to backdate your claim.

So if you're in a mixed-age couple, where only one of you reached state pension age before 15 May 2019, you can still apply under the old rules by asking for your claim to be backdated by up to three months. 

As well as getting the pension credit owed for that previous period, that means you can stay on the benefit going forward – rather than having to claim universal credit, which would be worth less.   

This ability to backdate claims by up to three months means that mixed-age couples could have until 13 August to put in a new claim for pension credit and/or housing benefit – though the sooner you do it, the better. Claiming just now could yield pension credit top-ups to your income going back to March. Delay until August and you'll only receive top-ups from May.

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Pension credit

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