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Pension credit

Pension Credit guarantees all those receiving the state pension an income of at least:

  • £159.35 a week for a single person
  • £243.25 a week for those with partners

And there is additional money available for those aged 65 or over with modest savings - up to:

  • £137.35 is the single person's threshold
  • £13.20 a week maximum for a single person
  • £218.42 is the couple's threshold
  • £14.90 a week maximum for those with partners

The person who applies for Pension Credit must be at least the state pension age; it does not matter if the partner is younger.

Income and savings

As with Child and Working Tax Credits, income is assessed jointly for couples.

Not all types of income are included. The main components are:

  • Pensions
  • Certain benefits
  • Earnings from a job

Savings and investments are converted to income by using £1 per week for every £500 or part of £500 over £10,000 relating to:

  • Money in a bank, building society or post office account or at home
  • National Savings Certificates and Premium Bonds
  • ISAs
  • Income Bonds, Capital Bonds or Pensioner (Granny) Bonds
  • Shares or unit trusts
  • Property and land (excluding the normal residence)

The earnings limits may be relaxed if the individual, or partner:

  • Is severely disabled
  • Looks after a person who is severely disabled
  • Has certain housing costs, e.g. mortgage interest

Method of payment

The money will be paid weekly into a bank, building society or post office account. A pension credit of less than £1 a week will probably be paid quarterly. If it is less than 10p a week it will probably be paid only if it can be combined with another benefit.

How to apply

Application by telephone to the Pensions Credit helpline on 0843 557 4315 or text phone 0800 169 0133 is recommended, as the application form and accompanying notes occupy 31 pages. It is also possible to apply over the internet.

From age 65, most pensioners will have to report changes in income only once every five years.

Examples

Here are some examples provided by The Pension Service to show how much Pension Credit people with different circumstances might get.

Jackie - single, age 62

Jackie is single, aged 62 and owns her own home. She has a State Pension of £122.30. She has no other income. Her savings are £5,000.
Jackie will get Guarantee Credit of £37.05 a week, bringing her total weekly income to £159.35. Her savings of £5,000 are ignored because they are below £10,000.
Jackie is 62 and is only eligible for Guarantee Credit.
Jackie will get full Housing Benefit, and help with other things like dental fees because she gets Guarantee Credit.

Sarah and Stephen - couple, both 75

Sarah and Stephen are both 75 and have £256.95 a week:

  • Basic State Pension (Sarah) £119.30
  • Basic State Pension (Stephen) £71.50
  • personal pension (Sarah) £59.15
  • savings of £13,500 (£1 is deducted for every £500 of savings they have over £10,000, which is £7 for £13,500)

As Sarah and Stephen's income is over £243.25, they cannot get Guarantee Credit, but they are entitled to £6.99 Savings Credit.

Sarah and Stephen will get Pension Credit of £6.99, bringing their weekly income to £269.94.

John - single, age 63

John is 63 and gave up full time work 8 months ago. He lives alone in his own home and earns £85 a week from a part time job.

In John's earnings, £5 is ignored and the remaining £80 counts as income for Pension Credit purposes. John will get Guarantee Credit of £74.35, bringing his total weekly income to £159.35.

John cannot get Savings Credit as he is only 63, but he may be entitled to Savings Credit when he reaches 65.

Betty - single, age 75

Betty is 75, severely disabled and lives alone. She has £9,000 in savings and gets £205.40 from:

  • Basic State Pension £122.30
  • Attendance Allowance £83.10

When working out her Pension Credit, Attendance Allowance and Betty's savings (less than £10,000) do not count as qualifying income.

Betty gets Pension Credit of £100.10 a week (this includes an extra £62.45 a week because she is severely disabled). This brings her total weekly income up to £305.50.

Betty cannot get Savings Credit because her qualifying income (£122.30) is lower than the Savings Credit starting point of £137.35 for a single person.

Do contact us if you would like further help or advice on this subject.