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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 8 October 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.

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 

Since 15 May 2019, couples have generally only be able to 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. Charity Age UK says the change could cost some couples up to £7,000 a year in pension credit.

However, where only one partner has reached state pension age but is claiming housing benefit for the couple, the couple can still put in a new claim for pension credit.

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.)

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 my circumstances change?

    People who reach state pension age after 15 May 2019 aren't 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 recent rule changes for couples. This could happen if:

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

    • You stop being entitled to pension credit because of a change in circumstances, then become entitled again, but your partner hasn't reached the qualifying age. Again, you face having to apply for universal credit instead.  

  • 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.

Can 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.

 

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Pension credit

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