What is Pension Credit? Our guide covers who qualifies for it, how much you could receive, what extra benefits it can get you access to and how to apply for it.
According to research by SunLife, nearly 7 million people aged over 50 in the UK have no private pension savings. A recent interim report from The Pensions Commission also found that 45% of working-age adults in the UK are not saving into a pension at all, and at least 15 million people are not saving enough to retire.
When you realise that the State Pension alone is not enough to afford you a moderate life (according to the Retirement Living Standards) if you are a couple, and too little even for a minimum life if you are single (and this assumes you have no rent or mortgage to pay), this is worrying news.
So what will you do if you get to State Pension age and you don’t have enough money to live on? One option is to keep working to some degree. If you enjoy what you do, this isn’t the worst option in the world as it can help to give you purpose, and could even help you to live longer.
But what if work is not an option for you? Could a benefit like Pension Credit step in and fill the gap? To find out, let’s explore what Pension Credit is, who qualifies and how much you might get.
What is Pension Credit?
Pension Credit is a UK benefit that is designed to help you if you are over State Pension age and have a low income. It provides you with additional money to support your living costs and can also unlock access to other financial support.
Pension Credit is separate from the State Pension, and you may still qualify even if you receive a pension, own your own home or have savings.
Many pensioners who are eligible for Pension Credit are still not claiming the benefit. According to the government’s own data, only between 60% and 70% of potentially eligible pensioners in the North and London are claiming Pension Credit. In the East and South this number drops to around the mid-50% mark. These people could be missing out on around £4,300 a year as a result.
How much is Pension Credit worth?
Pension Credit tops up your weekly income to a guaranteed minimum level of £238.00 if you are single, and £363.25 if you have a partner. You could get extra amounts if you have other responsibilities and costs. The top up and extra amounts are known as ‘Guarantee Credit’.
You could get an extra amount to cover your housing costs, such as ground rent if your property is a leasehold, some service charges, charges for tents and site rents.
If you get Pension Credit, you could also be eligible for a reduction in council tax, housing benefit if you are renting your home, and support for mortgage interest if you own the property you live in.
You will automatically get cold weather payments, and could also be eligible to apply for a free TV licence (once you’re aged 75) and help with NHS costs, such as prescriptions, dental treatment, glasses and transport costs for hospital appointments.
To find out whether you are eligible, and how much for, you can use the Pension Credit calculator.
How much State Pension will you get?
If you qualify for the full new State Pension you would currently receive £241.30 a week. And if you get the basic State Pension you would get £184.90 per week.
Who is eligible for Pension Credit?
Eligibility for Pension Credit is based on your household circumstances rather than just your personal income. To be entitled to Pension Credit in England, Scotland, or Wales, you usually need to:
- Have reached State Pension age
- Live in the UK
- Meet the income requirements
- Include your partner in your claim if you live together as a couple
What are the income rules for Pension Credit?
As mentioned, Pension Credit will currently top up your weekly income to:
- £238 per week for a single person
- £363.25 per week for couples
Even if your income is above these levels, you may still qualify if you have a disability, care for another person, have housing costs or have specific additional circumstances.
Do your savings affect Pension Credit?
Many people assume that they automatically won’t be able to claim Pension Credit if they have savings. However, this isn’t the case. According to the current rules:
- Savings of £10,000 or less usually don’t affect your entitlement to Pension Credit
- Amounts above £10,000 are treated as producing additional income for assessment purposes
Extra benefits available through Pension Credit
Pension Credit is sometimes called a gateway benefit because receiving it can open access to other support. This includes:
- Housing Benefit
- Council Tax Reduction
- Support for Mortgage Interest
- Help with NHS dental costs
- Help with glasses and travel costs for medical appointments
- Warm Home Discount support
- Free TV licence
For many households, these extra benefits can significantly increase the overall value of claiming Pension Credit.
How to apply for Pension Credit
You can apply for Pension Credit online, by telephone or, in some situations, by post. Before applying you will need to make sure you have:
- Your National Insurance details
- Information about pensions and income
- Details of any savings and investments
- Your housing cost information
Three common Pension Credit myths
Here are three of the biggest myths we hear about Pension Credit, and the facts:
- I own my home, so I cannot claim: Owning your home does not automatically disqualify you.
- I have savings, so I won’t qualify: Many people with savings still receive Pension Credit.
- I already receive the State Pension and am not entitled to any more: Pension Credit is separate from the State Pension and may provide additional support.
Frequently asked questions about Pension Credit
Can I get Pension Credit if I have a private pension?
Yes, you can get Pension Credit even if you have a private pension, savings or own your own home.
Can couples claim Pension Credit?
Yes. In fact, if you live with someone as a couple (whether you are married or in a civil partnership or not) you must include them in your application.
Can Pension Credit be backdated?
If you are eligible, you can backdate your Pension Credit claim by a maximum of three months.
Are you eligible for Pension Credit?
Pension Credit can provide you with more than just additional weekly income. As you have just read, it may unlock several other forms of financial assistance and help reduce household expenses. Because eligibility depends on many different factors, many people assume they do not qualify when they actually might. Make sure you check your eligibly and claim any money you are due.
