State Pension

What is pension credit? An in-depth guide

Once you reach retirement age, you will be entitled to claim a state pension. However, for many people, pension income may not be enough to cover the cost of living. Thankfully, the government offers pension credit to people who may need to top up their weekly income.

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What is pension credit? An in-depth guide
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Once you reach retirement age, you will be entitled to claim a state pension. However, for many people, pension income may not be enough to cover the cost of living. Thankfully, the government offers pension credit to people who may need to top up their weekly income.

According to Money Saving Expert, around 60% of eligible households are unaware that they can benefit from pension credit.

In this guide, we will look at what pension credit is, how can you claim pension credit, and what you need to do to qualify.

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What is Pension Credit?

Pension credit is a top-up benefit for people who are of retirement age, and who can claim the UK state pension. It is means-tested, which means that your income will dictate how much you could receive in additional support.

Pension credit splits into two parts; guarantee credit and savings credit. It’s important to note, however, that you can only claim savings credit if you reached state pension age before April 6th, 2016.

What is Guarantee Credit?

Guarantee credit is the portion of pension credit that most claimants are likely to receive. It, effectively, helps top up the money you receive each week.

Guarantee credit will consider your entire income. That means you will need to provide information on any working or private pensions you may draw from. Your state pension rate will also apply.

Do also be aware that the amount of money you have available in savings accounts may affect your guarantee credit claim. If you have any investments and money saved over £10,000, for example, that may affect how much guarantee credit you can claim.

You can claim guarantee credit as a single person or couple. We will cover how much you could receive later in this guide.

What is Savings Credit?

As mentioned, savings credit will only apply to you if you are retired and were of an age to draw on your state pension before April 6th, 2016.

This is an extra boost to your income which rewards you for saving money towards the end of your working life.

How Much Could I Receive from Pension Credit?

The amount of money you could claim from pension credit will depend on if you are claiming as a single person, or as a couple. You will also receive different amounts based on guarantee credit and savings credit guidelines.

At present, you may be able to claim an amount which tops you up to £173.75 per week if you are a single claimant. As a couple, you may be able to top this up to £265.20. However, you must be in a civil partnership or be married.

Savings credit works a little differently. As with guarantee credit, the government will consider your income, though they will also consider how much you have in savings. You can claim up to an additional £13.97 per week if you are single, and up to £15.62 per week if you are in a couple.

Am I Eligible for Additional Top-Ups?

It is worth keeping in mind that you may receive additional top-ups from the government depending on your circumstances. For example, if you are caring for your spouse or a relative, you may receive extra money. The same may apply if you are paying for your home, or if you are disabled.

It is therefore worth discussing your claim carefully with an advisor to find out how much you could potentially receive.

Am I Eligible for Pension Credit?

If you are of state pension age and receive income less than £173.75 per week as a single person, you can claim for pension credit. This threshold is higher for couples, at £262.50 per week. Pension credit will top you up to these amounts.

The government will consider all the income you receive. This will include your pensions, as well as any savings and investments. However, only those savings and investments worth more than £10,000 are currently considered.

If you receive any benefits from the state, these will also add to your income. Age UK states that up to 90% of applicants are successful, making it worth inquiring with the Department of Work and Pensions.

For couples, both of you will need to be of state pension age, or one of you must be claiming couple’s housing benefit. These rules have been in place since May 2019.

How Can I Claim Pension Credit?

Filing a claim for pension credit is simple – you can call 0800 99 1234 to speak to the government’s pension credit claim line. If you know that you will likely benefit from the credit, you can apply a maximum of four months in advance.

To avoid any potential delays, have the following information to hand when you call:

  • Income details.
  • Savings and investment details.
  • Bank account information (such as sort code, account number and branch).
  • National Insurance details (your number will be enough).

You can also apply online through the simple guide at GOV UK, the official government website. Doing so should only take you a few minutes to fill in and submit. However, you can only access this service if you are already claiming your state pension. The government also states that you can’t include young people, including children, in online claims.

If you would prefer to apply via post, you can. You can access the main GOV UK pension credit page and print out a form. Or, if you prefer, you can ask a member of the helpline team to send you a form in the post.

If you need help applying for pension credit, you can ask a friend or family member to be with you when you call. Or, for paper forms, you can ask for support from Citizens Advice to help you complete your application.

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