PENSION CREDIT EXPLAINED: It is tax free and provides extra money for pensioners of qualifying age.
But, you do not qualify for Pension Credit until you reach the minimum age for qualification. The qualifying age for Pension Credit will increase to 66.
Pension Credit benefits entitlement cannot start before you reach 65 years old (for most claimants).
The two separate elements are ‘Guarantee Credit‘ and ‘Savings Credit‘. The extra money may be payable each week for those with Pension Credit eligibility.
Note: There could be as many as 4 million seniors who should be claiming Pension Credit in the United Kingdom.
UK Pension Credit Elements
- Guarantee Credit: Could top up weekly incomes to £182.60 for singles or £278.70 for couples.
- Savings Credit: Extra payment for those who saved some money towards retirement such as a pension.
Note: The government guide to Pension Credit is also available in a Welsh language version (Cymraeg).
How Much is Pension Credit?
|Your Status or Circumstance||Guarantee Credit Element (weekly amount)||Savings Credit Element (weekly amount)|
|Single Person||Top Up to £182.60||£14.48 (maximum)|
|Couples||Top Up to £278.70||£16.20 (maximum)|
Note: Reaching UK State Pension age on or after the 6th of April 2016 means you may be ineligible for Savings Credit.
Pension Credits amount may be higher in some cases. The rates increase for those who are severely disabled or have certain housing costs. There are also some extra payments available for those who are caring for someone as a carer.
The HMRC Government Pension Credit Calculator is an online tool to help you work out how much you could get.
Receiving Pension Credit also entitles you for other welfare benefits. Use the benefits calculator to check what you might get.
Pension Credit payments are usually sent direct to the claimant. Like all benefits, pensions, and allowances they will go into a secure account that you have. It can be a bank account or a building society account.
Pension Credits If Circumstances Change
An increase in your income or capital affects how much Pension Credit you get. Phone the Pension Credit helpline any time there is a change in your circumstances.
Assessed Income Period (AIPs)
What is an Assessed Income Period? AIP is a period when there is no need to report changes to your pensions, investments, or savings. Your Pension Credit award letter informs you if you have an Assessed Income Period.
UK Pension Credit Eligibility
Guarantee Credit Element
There are two main qualifications to get Guarantee Credit:
- You must be living in England, Scotland, or Wales.
- Either you or your partner must be at Pension Credit qualifying age.
There is a gradual increase occurring to Pension Credit age qualification. It is going up to be 66 years in stages. This puts it in line with the same increase in the State Pension age.
Savings Credit Element
You or your partner must be at least 65 to qualify for the extra Savings Credit. Pension Credit criteria treats individuals who live with their spouse or partner as couples. This happens even for those who are living in a civil partnership or those are not actually married.
You are still entitled to apply for Savings Credit on or after the 6th of April 2016. This applies even if you reach the State Pension age before that annual tax date.
State Pension Age (on or after 6th April 2016)
Reaching State Pension age on or after 6 April 2016 means you are unlikely to qualify for Savings Credit. But you may still get it if both of these apply to you.
- You are a couple with one of you reaching State Pension age before 6 April 2016.
- You were already receiving Savings Credit up to 6 April 2016.
You would then fail to qualify if you lose Savings Credit eligibility for any reason after the 6th of April 2016.
Working Out Income for Pension Credit Criteria
They will work out your income when you apply for Pension Credit including your:
- Earnings, State Pension, or any other pensions.
- Social security benefits (e.g. Carer’s Allowance).
- Savings and investments over £10,000 (£1 counts for every £500 (or part)).
What if you have a private or workplace pension? The amount you expect to receive calculates as income. The calculation occurs from the date you qualified for it, if you had claimed it.
Claiming Pension Credit means you cannot defer your State Pension. This also applies if your partner is on Pension Credit. That means you lose the benefit of building up extra State Pension or a lump sum.
Working out Pension Credit also includes income you would expect to get from your State Pension.
This happens no matter whether you claim it or not. But, the calculation for Pension Credit does not include:
- Attendance Allowance
- Christmas Bonus
- Council Tax Reduction
- Disability Living Allowance
- Housing Benefit
- Personal Independence Payment
What if you register for Self Assessment?
You must inform the Pension Service how much Income Tax you expect to pay for the current tax year. They need to adjust the calculations because it affects how much Pension Credit you get.
Pension Credit: If You Move Abroad
If you move overseas permanently you cannot get the UK Pension Credit.
How to Claim Pension Credit
Applying for Pension Credit is usually quicker by phone. You must be there if a friend or family member phones on your behalf. There is also a paper application available from most local voluntary organisations.
When you claim Pension Credit you will need:
- Your National Insurance number and your bank account details.
- Detailed information about your income, investments, and investments.
What is the earliest you can start your Pension Credit application? You can apply any time within the 4 months before you reach the qualifying age. They will backdate for 3 months if you make a claim after reaching Pension Credit qualifying age.
Appeal a Decision about Pension Credit
If you disagree with a decision you can appeal to the Social Security and Child Support Tribunal. But, there have been some procedural changes. You must now ask for ‘mandatory reconsideration‘ before making an appeal.