pension credit

Pension Credit

Boost your retirement income with a state top-up

Pension credit is a tax-free, means-tested benefit aimed at retired people on low incomes and can be worth £1,000s a year. Plus, if you claim it you can access a whole raft of other benefits including council tax discounts and free TV licences for over-75s. However, almost 1m eligible households don't claim – often because they don't know they can or that they need to. This guide tells you how to check if you qualify and how to claim.

Read more on pensions

State pension guide. Check if you can boost it.
Pension need-to-knows. 17 key points for retirement saving.
Pension credit forum discussion. Share your experiences.

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What is pension credit?

Pension credit is a means-tested benefit aimed at people over state pension age offering a top-up to their income.

It's made up of two parts, and while some people get both, many can qualify for just one of the two:

  • Guarantee credit - this is the main part of pension credit, giving you a top-up of your weekly income to a minimum guaranteed level. This minimum standard guarantee level for 2021/22 is £177.10 if you're single, and £270.30 if you're in a couple. See below for all the details on eligibility

  • Savings credit - for those who reached state pension age before April 2016, there's an extra boost available if you've made provision for your retirement via savings, work or a private pension. This gives you up to £14.04 per week if you're single, and £15.71 if you're in a couple. To qualify you've got to earn above a threshold amount of £153.70 if you're single and £244.12 if you're in a couple. See below for a full explanation of savings credit criteria and how you might still qualify if you reached state pension age after April 2016. 

More than three million households are eligible for pension credit, but an estimated one in three don't claim – in many cases because they don't realise they could be entitled to it.

Do I qualify for pension credit?

To qualify for pension credit you must:

  • Live in the UK – England, Scotland, Wales or Northern Ireland.
  • Have reached state pension age.
  • If you're in a couple, you'll BOTH need to have reached state pension age. You don't have to be married or in a civil partnership, you're considered a couple if you live together. For couples, one partner claims and gives income and savings details for both partners.

 Extra criteria for savings credit: 

  • To qualify for savings element as well (if you're making a new claim) you also need to have reached 65 if you're a man, and 63 if you're a woman before 6 April 2016 – the state pension ages back then.
  • However, if you're part of a couple and just one of you satisfies ALL of these conditions, you could still qualify for savings credit as a couple. 
    You or your partner must:
    • Have been entitled to savings credit immediately before 6 April 2016
    • Have been awarded savings credit with effect from a day before 6 April 2016
    • Have remained continuously entitled to savings credit at all times since the beginning of 6 April 2016.

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How much can I get?

The average weekly amount of pension credit is £58 – or more than £3,000 a year – according to Government figures. But only certain people are eligible to get anything. What you'll get depends on three main things:

  • Your income. This includes your basic and additional state pension, income from other pensions, income from any jobs or social security benefits you have.
  • How much you have saved or invested. Any amount over £10,000 is converted into an income rate of £1 for every £500. See how this is worked out below.
  • If you're in a couple. This is defined as having a partner who you live with. The value of your combined income and savings will be taken into account.

As we said above, pension credit has two parts. The main part is "guarantee credit" and this is a low income top-up. The second part is "savings credit", which is a bonus for low-income pensioners, who've nevertheless managed to put aside a little extra towards their pension income. You can qualify for one without the other. Here's how they each work:

1. Guarantee credit – top-up for those on low incomes

This one's simple – guarantee credit tops up your weekly income to a guaranteed minimum level. Your income's worked out as what you get from work, pensions (including state pension) and assumed income from savings (see below). Then it's topped up as follows:

  • If you're single. If your weekly income (including pension) is below £177.10/week – pension credit will top you up to this amount.

  • If you're in a couple. If your joint weekly income is below £270.30/week – you'll get a top up to your combined income to this amount.

2. Savings credit – a reward for those on lower incomes who've managed to build up a little extra income

Savings credit gives you up to £15.71 per week (about £800 per year) if you've made extra provision for your retirement. The name's a little misleading, as it doesn't just look at how much  savings you have, rather it's the income level you get from your savings (see how this is worked out below), as well as additional pension pots, and/or any earnings from work or other sources that's taken into account.

Here's how it works:

  • If you're single. For every £1 of income between £153.70 and £173.75 a week, you get 60p of savings credit, up to a maximum of £14.04/week. However, above those earnings, it starts to taper off, so for every £1 of income you have over £173.75/week, your pension credit is reduced by 40p.

  • If you're in a couple. For every £1 of income between £244.12 and £265.20 a week, you get 60p of savings credit, up to a maximum of £15.71/week. However, above those earnings, it starts to taper off, so for every £1 of income you have over £265.20/week, your pension credit is reduced by 40p.

You might get more in savings credit if you're a carer, severely disabled, responsible for a child or young person, or have certain housing costs. Check on the Gov.uk website.

If you qualify for both guarantee credit and savings credit, you can rest assured your savings credit will not be reduced, since savings credit only starts to reduce once you earn too much to qualify for any guarantee credit.

How are my savings and investments taken into account when working out my income? 

Your savings and investments do come in to play when working out your eligibility for pension credit, but not in the way you think – it's actually about the income you're deemed to be earning from them.

  • Less than £10,000 saved or invested doesn't count. If you've less than this, it won't affect your eligibility for either your guarantee credit or your savings credit at all.

  • More than £10,000 in savings or investments. Here, the state assumes you get an income of £1 a week per £500 (or part of £500) of savings and investments that you hold, and assesses your claim on that assumed income. Incidentally, you'd need to be earning a massive 10.4% interest to get anywhere near that.

How does guarantee credit and savings credit work in practice?

As this is quite complex, we've done an example here of what someone might be eligible for at their level of income:

Rachel Retire-right is single. She is 69. She hit state pension age in 2015. From years of working casually and part-time, she has a weekly pension income of £163.75/week, made up of £110/week in state pension and £53.75 in a private pension. She also has £6,700 in savings. Since her savings are under £10,000, they are not taken into account as part of her income.

Rachel can apply for BOTH guarantee credit AND savings credit.

Her guarantee credit will be £13.35 a week (£694 a year). Rachel earns £13.35 a week below the £177.10 set amount, so guarantee credit will top her up to this amount.

Her savings credit will be £6 a week (£312 a year). Since Rachel has income of £163.75, and includes contributions from a second pension, she's entitled to 60p of savings credit for every £1 she earns over £153.70 a week. She's £10.05 a week over the income threshold to earn savings credit, so she'll get 60p for every full £1 she is over. This means she gets £6 a week in savings credit. She doesn't earn over the savings credit taper limit of £173.75 a week, so this is her final savings credit amount.

Rachel will get a total of £19.35 a week (£1006.20 a year) from guarantee credit and savings credit. This means pension credit has topped up her income from £163.75 a week to £183.10 a week.

Quick questions

  • The figure you initially declare for the value of your savings and investments stays on your file and is calculated at that rate in future 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.

  • 'Mixed-age' couples, where only one partner has reached state pension age, will need 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. Once you're both at state pension age, you can then apply for pension credit (you won't be eligible for universal credit once you both hit state pension age).

    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.

  • 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 that would stop you receiving financial help from the Government. You will also need to satisfy the 'habitual residence test'.

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How do I claim pension credit?

The quickest way to claim pension credit is via Gov.uk, or by calling 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.

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

Quick questions

  • In short, yes. If your circumstances change you need to notify the Pension Service, including any changes to income, savings and who you live with. For example, there are some people who could end up losing pension credit they currently claim as a result of the 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 2019, you have had 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.
  • 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 Government's guidance for help.

  • Yes. 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.

Other benefits you qualify for if you get pension credit

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. These include:

Free TV licence for over-75s – worth £159 

As of August 2020, over-75s needed to start paying for their TV licences. But those on pension credit can claim them for free. An annual standard colour TV licence is now £159. 

Council tax reduction – potentially worth £1,000s/yr

If you get the guarantee credit part of pension credit, you're entitled to the maximum council tax deduction. Depending on your local authority's rules, this may cover your entire council tax bill. But if you live with any adults who aren't dependent on you, then the reduction might be less.

If you get the savings credit part of pension credit, you might also be eligible for some discount on your council tax, but typically not as much.

To apply for a council tax reduction, you'll need to get in touch with your council. Discounts can vary depending on where you live – check how much council tax reduction you could get.

Warm home discount – worth £140/yr

The warm home discount is a credit on your energy bill, normally given by the end of March each year to people on low incomes. If you get any amount of guarantee credit you are entitled to the rebate, but you need to be signed up with a supplier who is part of the scheme, and you also need to apply. You should get a letter between October and December each year telling you what you need to do. For more details, see our Energy Grants guide.

Housing benefit – potentially worth £1,000s/yr

If you rent your home and receive any amount of guarantee credit, you are eligible for the maximum housing benefit entitlement from your local authority. Housing benefit isn't a fixed amount, but you could get £100s a month, and even have your rent paid in full.

If you receive savings credit but not guarantee credit, you may get some help towards rent, but not the full amount.

You may not get the full amount if there are non-dependants in your household or, for example, if your rent is considered too high.

When you claim pension credit, you should be asked if you want to claim housing benefit at the same time. If you aren't asked, contact your local authority to apply.

Cold weather payments – potentially worth £25/wk in winter

This benefit is awarded for each continuous seven-day period of very cold weather (0°C or below) between 1 November and 31 March. If you're eligible, the money will be paid automatically into the same bank or building society account as your pension credit payments. See our Benefits Calculator for more on cold weather payments.

Free home insulation and boiler grants – worth £1,000s for some

Pension credit claimants may be able to get free cavity wall and loft insulation from their energy provider.  And if your boiler is broken, you may be able to get a grant for a new one from an energy provider – you don't always even need to be a customer to qualify. See our Free Insulation and Boiler Grants guide for details.  

Free dental treatment – worth £1,000s/yr for some

If you get any amount of guarantee credit, you're entitled to free NHS dental care. This could include anything from a check-up to full dentures. You don't need to apply for it – you just need to sign a declaration form when you visit your dentist.

Voucher for glasses/contact lenses – worth £39-£215 depending on prescription

If you get any amount of guarantee credit, you are entitled to a voucher for glasses/contact lenses. You ask for the voucher form when you have your eye test.

Other discounts

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. Check your local water board to see what it's offering.

You can also access the BT Basic phone service, which charges just £5.16/month for line rental, including a £1.50 call allowance. For BT Basic + Broadband, it's just £10.07/month.

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