What is pension credit?
Pension credit is a government scheme designed to offer a helping hand when saving for your pension by adding to your regular state pension. Pension credit is made up of guarantee credit and savings credit.
What is guarantee pension credit?
If you have a weekly income of less than £173.75 as a single person, guarantee credit adds to this. In a couple? Then your weekly income will be topped up if it’s below £265.20.
What is savings pension credit?
If you already have some money saved towards your retirement/pension, savings credit is an additional payment made to you by the government alongside guarantee credit.
How much pension credit will I receive?
The amount of guarantee credit and savings credit you’ll receive is based on your income and whether you’re single or in a couple.
So, if you’re single and claiming pension credit, guarantee credit will top up your weekly income to £173.75. If you’re in a couple, your weekly income will be topped up to £265.20.
The same applies for savings credit. If you’re single and your weekly income is a minimum of £150.47, your savings will be topped up to £13.97 a week. If you’re in a couple, your savings will be topped up to £15.62 a week if your shared weekly income is a minimum of £239.17.
All payments will be made to your bank account upon providing account details when applying for pension credit.
Do I have to pay tax on pension credit?
What about tax? No need to worry, tax is not paid on pension credit.
Working out your income
The government provides a pension credit calculator, which is an easy way to work out your total income and how much pension credit you’re entitled to.
Your income includes:
- State pension
- Other pensions
- Social security benefits
- Savings and investments over £10,000
Even if you aren’t claiming your state pension yet, this is included in your income and you can’t defer your state pension if you or your partner are on pension credit.
Your income doesn’t include:
- Attendance allowance
- Disability Living allowance
- Christmas bonus
- Housing benefit
- Council Tax reduction
Am I eligible for pension credit?
To qualify for pension credit, you must:
- Live in England, Scotland or Wales
- Have reached state pension age
- Have both reached state pension age if receiving pension credit as a couple
- Have a weekly income lower than £173.75 if single, and lower than £265.20 if in a couple.
Don’t worry if you already get pension credit and are now in a couple. If you were receiving pension credit before 15th May 2019, you’ll continue to get it even if your partner is under state pension age.
You can only begin receiving savings credit if you and your partner reached state pension age before 6th April 2016.
Are you a carer, disabled, or responsible for a young person? You may be eligible for more:
- The young person must live with you and be under the age of 20.
- If they are between the ages of 16 and 20, they must be in, or have applied for, apprenticeships (or any form of approved training) or non-advanced education (GCSEs or A-Levels).
- You’ll receive either £54.32 or £64.82 per week for each child/young person.
Has your entitlement to pension credit stopped for any reason? You can’t begin receiving payments again until yourself, or your partner are both of state pension age and are entitled to pension credit under the new rules. For example, if one of you receives housing benefit.
There are a number of reasons why your pension credit entitlement may change/stop. These personal circumstances include:
- Starting a new job
- Stopping work
- Entering hospital care or a care home
- Moving house
- Changing your name
- Changing your bank account
- Leaving the UK for more than 4 weeks
- Starting, or stopping, to look after a child under the age of 20
If any of these changes to personal circumstances apply to you, you’ll need to contact the pension credit helpline on 0800 731 0469. You’ll also need to report any changes to income/expenses to ensure your information is up to date.
What is the criteria for claiming pension credit?
Many people in the UK are eligible for pension credit but fail to claim for it. Here we’ll explain how the criteria works, and how and when you can claim for it.
Firstly, what will you need when claiming for pension credit? You’ll need to apply with your National Insurance number, information about your income, any savings and your bank account details.
There are a few different ways you can claim, either by post, phone or online.
Applying by phone? You can call the Pension Credit claim line on 0800 99 1234.
Applying online? You can only apply online if you have claimed your state pension already, and if there are no children included in your claim. Apply here through the government website.
When can I claim? You can begin applying for pension credit up to 4 months before you reach state pension age. State pension age is currently 65, but it’s predicted to increase in the future.