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Pension Credit – what are you entitled to?

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I’ve had a couple of emails about Pension Credit recently, from women who’d like to know if they’re able to claim it. Pension Guarantee Credit is available to you if you’re on a low income and have reached state pension age, and Savings Credit is paid when you reach 65. But changes come in for new claimants from couples from May 15th.

Pension Credit – what are you entitled to?

You can claim Pension Credit if your income is below a certain amount and if you have only a modest amount of savings. There are two different types of Pension Credit:

  • Guarantee credit: You can receive Pension Guarantee Credit if you’re on less than £167.25 a week if you’re single or £255.25 a week if you have a partner (figures for 2019-20).
  • Savings credit: You may be entitled to Savings Credit if you have less than £10,000 in savings. If you have more than £10,000, for every £500 you have in the bank (or part of £500), you’re counted as having an extra £1 a week in income. So, if you have £750 in savings, that counts as an extra £2 a week in income (because you have more than £500). The maximum Savings Credit you can get is £13.72 if you’re a single pensioner and £15.35 if you’re a couple.

SAVVY TIP: You may not be entitled to Savings Credit if you reach state pension age on or after April 6th 2016. However, you are entitled to claim if it you’re in a couple and one of you reached state pension age before April 6th 2016. The rules on this change from May 15th. After then, you’ll only be entitled to get Universal Credit if one of you is aged over state pension age and the other is under state pension age. NB You’ll actually be able to apply until 13th August 2019 because you can backdate your claim by up to three months. However, it’s worth getting your claim in as soon as possible.

If you are severely disabled, look after a severely disabled person or pay a mortgage, you may be able to receive Pension Credit (Guarantee and Savings) if your income is higher than the limits shown above.

When can I get Pension Credit?

The age at which you’re eligible for Pension Credit depends on the type of credit you’re applying for. The earliest you can apply for it is four months before you reach qualifying age. Don’t put off applying though, because you can only backdate it for three months.

  • Guarantee credit: If you apply for Guarantee credit as a single person, you have to be over the state pension age for women to get it. If you’re part of a couple living together, only one of you has to be over the state pension age for women. However, the government announced that from 15th May 2019, couples will only be entitled to Pension Credit if both of you are over state pension age. If you miss the deadline, you’ll only be able to get Universal Credit.

SAVVY TIP: You can find out the state pension age for women, and therefore the age you can get Guarantee Credit, by going to the state pension age calculator on the GOV.UK website.

  • Savings credit: You may be able to get Savings Credit if you’re aged 65 or over.

Changes to Pension Credit after May 15th

The change to the rules will come into force on May 15th 2019. The new rules mean that from that date, only couples where both partners have reached the state pension age for women will be able to claim Pension Credit. The only exception is if one of you has reached state pension age and is claiming Housing Benefit for both of you.

Pension Credit is one of the most underclaimed benefits, so it is worth applying before May 15th if you think you’re entitled to it.

SAVVY TIP: As I mentioned before, you are able to backdate Pension Credit claims for three months, so if you weren’t receiving it on May 14th, you can backdate your claim but you have to do this by August 13th.

What counts as income?

The Pension Credit rules say you can only get the benefit if your income is below a certain level. When working out how much income you’re receiving, you should include the following:

  • Earnings from a job

SAVVY TIP: The first £5 if you’re on your own, or £10 if you have a partner, is ignored.

  • Workplace or private pensions. This includes pensions that you haven’t already taken. I checked this with the Department for Work and Pensions when I originally wrote this article. They told me that if your workplace or private pension could be accessed at, say, age 60, but the normal retirement date was 65 so you’d chosen not to take it before then, it would still be taken into account.

SAVVY TIP: With many pensions, you would be entitled to a reduced amount or have to pay a ‘penalty’ if you take your pension early, so the answer from the DWP surprised me. But that’s what they’ve told me. They did also say that the rules might depend on the scheme and that you should call the Pension Centre on 0800 99 1234 to talk through your own circumstances.

  • State pension: The DWP say that your state pension income is taken into account even if you’d deferred (put off) taking it. Also, if you had deferred your state pension and claimed Pension Credit, you wouldn’t get the increased state pension that you’re normally entitled to from deferring it.
  • Certain benefits

You don’t have to include income you’ve received from:

  • Attendance Allowance
  • Disability Living Allowance
  • Personal Independence Payment
  • Housing Benefit
  • Help towards council tax

If you’re applying for Savings Credit, you have to include all money you have, such as:

  • Cash you have at home
  • Money in a bank or building society
  • Money in National Savings & Investments products
  • Cash or stocks and shares ISAs, shares or other investments
  • Property you own, except your main home

Working out your Pension Credit entitlement

There’s a Pension Credit calculator where you can get an estimate of the Pension Credit you may be entitled to.

Related articles:

Discounts you may be entitled to if you’re a pensioner

Claiming your state pension; what you need to know

Mortgages for the over-65s – getting a mortgage if you’re an older borrower

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