Home > > Pensions > Pension credit

Pension credit

Pension Credit guarantees everyone aged 60 and over an income of at least:

  • £132.60 a week for a single person
  • £202.40 a week for those with partners

Although these are the guaranteed amounts, those aged 65 or over are likely to be entitled to Pension Credit if their weekly income is less than:

  • £184 a week for a single person
  • £270 a week for those with partners

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

  • £20.52 a week for a single person
  • £27.09 a week for those with partners

The person who applies for Pension Credit must be at least 60; it does not matter if the partner is under 60.

From 2010 the age at which people can get Pension Credit will gradually change to 65, in line with the change to women's state pension age.

Income and savings

As with the other new Child and Working Tax Credits, income is assessed jointly for couples i.e £20.52.

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 £6,000 (or £10,000 for those living permanently in care homes) 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 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, eg 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 0800 99 1234 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.

Example 1

Jackie is 62 and owns her own home. She has a State Pension of £105 (this includes additional State Pension of £4.35) a week and no other income. Her savings are £5,000.
Jackie will get Guarantee Credit of £27.60 a week, bringing her total weekly income up to £132.60. We ignore her savings of £5,000 because they are below £10,000.
Because Jackie is 62 she can get Guarantee Credit only. When she is 65 she may also get Savings Credit. Because Jackie gets Guarantee Credit she will get full Council Tax Benefit and help with other things like dental fees.

Example 2

Mary and Frank are both 75 and have income of £210.25 a week, as follows:

  • Basic State Pension (Mary) £97.65
  • Basic State Pension (Frank) £58.60
  • Personal pension (Mary) £50.00
  • Savings of £12,000 (we count £1 of income for every £500 of savings they have over £10,000, which for £12,000 totals £4) £4

As Mary and Frank's income is over £202.40 they cannot get the Guarantee Credit but they are entitled to £23.95 Savings Credit.
Mary and Frank will get Pension Credit of £23.95 a week, which brings their weekly income to £234.20.

Example 3

Jack is 63 and gave up fulltime work eight months ago. He lives alone in his own home and earns £85 a week from a part time job.
We only count £80 as income for Pension Credit purposes, as we ignore £5 of Jack's earnings. Jack has no other income or savings.
Jack will get Guarantee Credit of £52.60, which brings his total weekly income up to £137.60. Jack cannot get Savings Credit as he is only 63, but he may be entitled to Savings Credit when he reaches 65.

Example 4

Mavis is 75, lives alone and is severely disabled. She has savings of £9,000 and gets £169.05 from the following:

  • Basic State Pension £97.65
    Attendance Allowance £71.40

We ignore Mavis's savings as they are less than £10,000, and we also ignore her Attendance Allowance when working out her Pension Credit. So Mavis will get Pension Credit of £88.60 a week (this includes an extra £53.65 a week because she is severely disabled). This brings her total weekly income up to £257.65. Mavis cannot get Savings Credit because her qualifying income (£97.65) is lower than the Savings Credit starting point of £98.40 for a single person. Her Attendance Allowance does not count as qualifying income towards Savings Credit.

Example 5

Denis is 60 on 21 June 2010. He currently gets Income Support of £65.45 a week and has no other income. He will continue to get Income Support until he reaches the minimum qualifying age for Pension Credit on 6 September 2010 when he will be just over 60 years 2 months. At this time his total weekly income will increase to £132.60 if his circumstances remain the same.

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