What is Pension Credit?

What is pension credit?

Pension credit is a type of benefit for retired people on low income. It has two different parts and you may be eligible for both or one, depending on your circumstances:

1. Guarantee Credit

The main part of pension credit is guarantee credit. Guarantee credit tops up your weekly income. The current guaranteed level is £177.10 if you're single, and £270.30 if you're married or in a civil partnership. Keep reading for more information.

2. Savings Credit

If you reached state pension age before April 2016, then you can get extra income in the form of savings credit. However, to qualify, you have to put some savings towards your retirement whether it’s savings, workplace or personal pension. Essentially, you have to have money other than the state pension set aside for your retirement. 

Savings credit gives you up to £14.04 per week if you're single, and £15.71 if you're married or in a civil partnership.

Millions of UK households are eligible for pension credit but around one in three households don’t claim! Read on to find out whether you qualify for pension credit...

Am I eligible for pension credit?

To qualify for pension credit, you must be the following:

• Living in the UK.
• Have reached state pension age. Check your state pension age here.
• If you’re married or in a civil partnership then you both need to have reached state pension age.
• Weekly income is less than £177.10 if single, or £270.30 if married/civil partnership

However, if you have a disability or are a carer, you might still receive some pension credit if you don’t meet all the above criteria. 

Do my savings count as weekly income?

If you have £10,000 or less in savings, this won’t impact your eligibility for pension credit. If you have more than £10,000 in savings, every £500 over £10,000 counts as £1 income a week.

There are some extra criteria required to receive the savings part of pension credit:

• You need to have reached 65 if you're a man, and 63 if you're a woman before 6 April 2016. These were the state pension ages back then.
• If you’re married or part of a civil partnership then only one of you needs to meet all the criteria to qualify for savings credit. 

Could I end up losing my pension credit if my circumstances change?

If your circumstances change, you will need to notify the Pension Service. Changes to income, savings and who you live with could result in you losing your pension credit.  

How much pension credit can I get?

The average weekly pension credit is £58 which equates to around £3,000 a year. There are two different parts of pension credit and the amount you can get from each differs:

How much you can get with guarantee credit

Guarantee credit is simple. It tops up your weekly income to a guaranteed minimum amount. Your weekly income is worked out by taking into account what you earn from work, pensions and any income from savings. 

Here’s how much you can get with guarantee credit:

• As a single person: if your weekly income is less than £177.10 a week then guarantee credit will top it up to this amount.
• As a couple: if your combined weekly income is less than £270.30 a week then guarantee credit will top it up to this amount.

How much you can get with savings credit

Savings credit works as a reward for people on lower incomes who’ve managed to save some money towards their retirement. Additional weekly income provided by savings credit is as follows:

• Up to £14.04 a week for a single person.
• Up to £15.71 for married couples and civil partners.

Savings credit is a bit more complicated than guarantee credit because it doesn’t work out how much in savings you have but the income level you earn from these savings. This is how it works:

• As a single person: 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 a week.
• As 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 a week.

How is pension credit paid?

Pension credit payments are paid directly into your bank or your choice of account. You have the option of receiving pension credit payments weekly, fortnightly or monthly.

How do I claim pension credit?

The quickest way to apply for pension credit is online via the Government website. If you prefer speaking directly to someone, you can also apply by calling the Pension Service on 0800 99 1234.

You’ll need the following information to hand:

• Your National Insurance (NI) number.
• Information and knowledge about your income, savings and investments.
• Your bank account details.

You can also fill in a paper application form if you’d prefer. 

When should I apply for pension credit?

You can apply for pension credit up to four months before you reach state pension age. Check your state pension age here. 

Can I backdate my pension credit claim?

Pension credit can be backdated up to three months, as long as you were still entitled to the same pension credit benefits three months ago. When applying for pension credit, you’ll need to request that your claim is backdated. You can do this when applying online, over the phone or via the paper form.

Can I appeal the decision about my pension credit?

If you disagree with the decision made about your pension credit, then you can ask for a written statement of reasons why your claim was denied. If you still disagree with the decision that has been made, then you can request 'mandatory reconsideration' before you appeal.

The time limits are strict and so you need to appeal the pension credit decision within one month. So, make sure you act quickly!

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