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. Figures from Age UK show that one in three people who are entitled to Pension Credit don’t claim it.

Who can claim
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 £155.60 a week if you’re single or £237.55 a week if you have a partner (figures for 2016-17).

– 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 £13.07 if you’re a single pensioner and £14.75 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 (although you are entitled to claim if it you’re in a couple and one of you reached state pension age before April 6th 2016).

– You may get Pension Credit if your income is higher. 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 it?
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: You may be able to get the Guarantee Credit when you or your partner reaches the women’s state pension age, which is currently rising from 60. The qualification age for Guarantee Credit applies to both men and women.

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.

What counts as income?
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 I checked with the Department for Work and Pensions, who 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, the pension income you would have been entitled to at the time you claim Pension Credit would 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. The DWP said they would not assume you were receiving your pension for the period after you’ve applied for it, but before you receive it. 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 you would not receive Pension Credit while you have deferred your state pension and, in addition, you will not build up your state pension if you have deferred it and are receiving Pension Credit.

– 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. There’s a useful guide to money and benefits for older people from the charity Independent Age. You can download the Moneywise guide to How to boost your income and save money, free of charge.

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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