Finding money in old age can be a challenge. One way to get a little bit more income to help with household bills is to apply for something called Pension Credit.
In this guide, we will discuss what Pension Credit is, how you apply for it, and what the eligibility criteria is for receiving it.
What is Pension Credit?
Pension Credit is a means-tested benefit for people on a low income who have reached the Pension Credit qualifying age. Means-tested benefits are benefits available to people who can demonstrate that their income and savings are below a certain level.
Pension credits have two parts:
- Guarantee Pension Credit – this tops up your weekly income if you have a low income.
- Savings Pension Credit – this an extra payment to reward people who have prepared for their retirement by having some savings or income.
You may be able to get one or both parts, depending on your circumstances.
Can I claim Pension Credit if I am still working?
Yes. You can claim Pension Credit whether or not you are still working so long as you are older than the qualifying age and pass the means test.
Do I have to have paid enough National Insurance contribution to receive Pension Credit?
You do not need to have paid any National Insurance contributions to receive pension credit.
What are the eligibility criteria for claiming Pension Credit?
There are different rules for claiming the Guarantee Pension Credit and the Savings Pension Credit.
Let’s have a look at each in a little more detail:
Guarantee Pension Credit
If you meet the age criteria and are on a low income, you could receive Guarantee Pension Credit. To get Guarantee Pension Credit you (or your partner) must have reached State Pension age.
Until 15 May 2019, only one partner in a couple needs to have reached State Pension age in order qualify for Guarantee Pension Credit.
From 15 May 2019, both members of a couple will need to have reached State Pension age in order to qualify for Guarantee Pension Credit. Where only one partner is aged over Pension Credit age, the couple will not receive it, though they may be eligible for a Universal Credit claim instead.
You can make a claim for Guarantee Pension Credit regardless of your savings and capital. However, if you have capital and savings above £10,000, every £500 above this is counted as £1 of income when your Pension Credit is calculated. This will affect eligibility and the amount you will receive.
Savings Pension Credit
You could get this part of the Pension Credit scheme if you have a certain amount of income coming in from pensions, savings, earnings and investments, are over 65 and have reached state pension age before 6th of April 2016, regardless of when you apply.
The Savings Credit closed for people reaching State Pension age on or after 6 April 2016. If you are a couple where one person reached State Pension age before 6 April 2016 and the other on or after this, you can only get Savings Credit if one of you:
- Was already getting Savings Pension Credit immediately before 6 April 2016 and
- Have been entitled to the benefit at all times since this date.
How much Pension Credit will I receive?
This depends on the type of Pension Credit you are eligible for. Calculations can be quite complex, and we recommend seeking guidance or using a Pension Credit calculator to make the process easier.
Guarantee Pension Credit
The calculation involves comparing your weekly income (which includes your partner’s income) to a weekly amount set by the Government. The maximum you can earn and still receive Guarantee Pension Credit is:
- £182.60 per week for single people
- £278.70 per week for couples
Guarantee Pension Credit will top up the income of those eligible to these amounts if they do not reach these thresholds.
The actual amount you get will vary depending on your circumstances. In some cases, you may receive more, especially if you are a carer or have a disability. If your income is too high to get Guarantee Pension Credit, you may still get some Savings Pension Credit.
Savings Pension Credit
If you are eligible for Savings Pension Credit, the amount you get depends on whether you have more or less weekly income than:
- £158.47 for single people
- £251.70 for couples
You must receive a minimum of these amounts to receive this benefit and the most you can receive is:
- £14.48 for single people
- £16.20 for couples
The more money you receive as income, the less you get in savings credit. For every £1 your income exceeds the savings-credit thresholds, your savings credit is reduced by 40p.
Do Pension Credits affect other benefits?
If you get Pension Credit you will be exempt from the Benefit Cap which limits the total amount of benefits working-age households can receive.
The Guarantee Pension Credit does not count as income when working out entitlement to other benefits. If you get Guarantee Pension Credit you will automatically qualify for maximum Housing Benefit, but you have to make a separate claim.
If you receive Pension Credit you will also qualify for:
- A Christmas Bonus each year (see the governments website for how much this is). You do not need to make a claim for this as it is paid automatically. It does not affect any other benefits you might get.
- A Cold Weather Payment. You do not need to make a claim as the payment will be made automatically for each qualifying period of cold weather.
How do I claim Pension Credit?
In England, Scotland and Wales you should call the Pension Credit Claims Enquiry line.
If you’ve already claimed your State Pension you can claim Pension Credit online on the Gov.UK website.
When you make a claim for Pension Credit, the Pension Service will decide what you are entitled to, and if so, how much.
When making a claim you will be asked for the following details:
- Your National Insurance number.
- Details of how much money you have coming in each week. This may include details of any pension you get from a former employer or a personal pension plan.
- Details of any savings and investments. The Pension Service will ask for the current balance in any bank and savings accounts and details of any investments, such as shares, premium bonds or trust certificates.
- Information on housing costs, such as mortgage interest, service charges or ground rent.
If you have a partner, you will need to have the same information about them.
Pension Credit can be a lifeline for many people in the latter years of their life when their income dwindles. We hope that, with a little help from this guide, you now understand the topic a little better.