What is Pension Credit?

Pension credit is a benefit that is based on income and is intended for individuals who have reached the qualifying age for the state pension and have a low income.

There are two components of pension credit called the guarantee pension credit and savings pension credit.

The credit is administered by the pension service (part of the DWP) and is classed as a non taxable benefit that doesn’t effect your state pension entitlement.

Your eligibility for pension credit is based on your (and your partners if you have one) income and some other factors like how much savings and investments you have.

The calculation of guarantee credit involves a comparison between your earnings and a government determined amount that is considered necessary to cover living expenses.

Claiming pension credit can be a valuable benefit for people with a range of different financial and living arrangements so if you are near or are already state pension age it’s worth finding out if you are entitled to pension credit.

How much is Pension Credit worth?

Pension credit provides additional funds to supplement your weekly income, increasing it to £218.15 if you are single or £332.95 per week if you have a partner.

Depending on your circumstances you may be eligible for additional amounts to cover other responsibilities and expenses.

You might be entitled to more pension credit if any of the following apply to you:

• You have a severe disability.
• If you care for another adult.
• If you are responsible for children or young people.
• If you have housing related costs like a mortgage.

Pension Credit eligibility

To qualify for pension credit you must firstly reside in England, Scotland, or Wales and secondly have reached state pension age.

Different pension credit rules are in use in Northern Ireland which this guide does not cover specifically.

You can also qualify for pension credit if you are of state pension age and receive housing benefit.

If your weekly income is below £218.15 the guarantee pension credit can give you some extra money to make up the difference to that amount.

Pension Credit eligibility as a couple

If you live with a partner you need to include their details on any application for pension credit.

One partner must submit an application for pension credit for both of you.

For pension credit purposes a partner can be defined as:

• Your spouse or civil partner, provided you live together.

Or

• Someone you live with as a couple, without being married or in a civil partnership.

To qualify:

• Both you and your partner have reached state pension age.
• One of you is receiving housing benefit for individuals over state pension age.
• If your joint weekly income is below the guarantee pension credit threshold it can be used to top up your joint income.

Savings Credit

If you reached state pension age prior to 6 April 2016, or if you are part of a couple and one of you did, there is a possibility that you could meet the criteria to apply for savings credit.

Savings credit is calculated based on the value of the retirement savings you have accumulated and can be received in addition to guarantee credit or as a standalone benefit.

In order to qualify for pension savings credit you must meet specific income requirements and have accumulated some retirement savings in addition to the basic state pension.

The lower your savings, the higher the possibility of being eligible for savings credit.

If you qualify for savings credit you can generate a weekly income of up to £17.01 or £19.04 for married couples and civil partners.

There is no specific limit on savings for pension credit however if your savings exceed £10,000, this will impact the amount you are entitled to receive.

Savings and investments for Pension Credit

Your savings and investments will not impact your eligibility for pension credit if the total amount is £10,000 or less.

If your savings and investments exceed £10,000 every additional £500 above this threshold will be considered as £1 of income per week.

For example if you have £11,000 saved in a tax free ISA it will be treated as £2 of income per week.

What counts as income for Pension Credit?

The type of income that is used to calculate your pension credit eligibility includes:

• State pension.
• Private pension.
• Employment income under PAYE.
• Self employment income.
• Most social security benefits.

Not all benefits are counted as income when working out pension credit including:

• Adult disability payment.
• Housing benefit .
• Child benefit.
• Council tax reduction.
• Disability living allowance.
• Social fund payments like winter fuel allowance.

Pension Credit calculator

An online pension credit calculator is available on .GOV.uk to help you work out your eligibility before you start your pension credit application.

The pension credit calculator does have it’s limitations meaning that individuals or partnerships falling into the following categories shouldn’t use it:

• If you are self employed.
• Own more than one property.
• If you are deferring your state pension.
• Have housing costs like service charges (this does not include housing benefit or mortgage repayments).
• Receive housing benefit for people over state pension age while your partner is under state pension age.

How do I apply for Pension Credit?

For people who have already claimed the state pension you can complete your application for pension credit online via .GOV.

You can also call the pension service claim line on telephone 0800 99 1234 or
textphone on 0800 169 0133 and either complete the process on the phone or ask for a form to be posted out to you for completion and return.

The pension credit claim form can also be downloaded but you will need to print it off so you can post it back to the pension service.

Application timescales:

You have the option to submit your application for pension credit as early as four months before you wish to begin receiving it.

In practical terms this generally means that you can apply up to four months prior to reaching the state pension age which is sensible so you don’t miss out.

If you have already surpassed the state pension age it is possible to backdate pension credit claims by up to three months only.

Pension Credit application checklist

Before you start an application for pension credit either online or by phone it’s a good idea to have the details you need available to help make the process as easy as possible.

You must provide the pension service with the following information:

• Your bank account information.
• Your national insurance number. You can use the HMRC app or your personal tax account if you can’t find it.
• Details about your income (employed and self employed).
• Savings and investments figures.
• Pension income from both private and state providers.
• Your housing costs, which include mortgage payments, interest payments, and service charges.
• If you are married or living with a partner you need to provide your partner’s details.

Pension Credit and other benefits

If you meet the requirements for pension credit it opens up the possibility of being eligible for other types of benefits which can help cover the cost of a range of different living expenses.

These may include:

• Being entitled to a free TV licence if you are over the age of 75.
• Exemption from paying council tax (unless you share your residence with others).
• Access to the warm home discount.
• Eligibility for housing benefit.
• The potential to receive cold weather payments.
• Qualifying for free home insulation and boiler grants.
• Access to free dental treatment.
• The opportunity to receive vouchers for glasses, contact lenses and the cost of travel to the hospital.
• Local discounts such as reduced water bills or discounted phone tariffs.

Pension Credit phone number

Determining eligibility for pension credit can be a confusing process so phoning the pension credit helpline on 0800 731 0469 (textphone 0800 731 0464) is recommended.

The pension service opening times are from 8am to 6pm Monday to Friday except on UK public holidays.

You can use the pension credit helpline to update your details if you are leaving the UK for example or have experienced a change in your financial or living arrangements.

You can write to the pension service at:

The Pension Service
Post Handling Site A
Wolverhampton
WV98 1AF

Age UK also have a free advice line on 0800 678 1602 which you can use to speak to a specialist advisor for further pension credit support.