Pension Credit is a means-tested benefit for people who have reached the qualifying age.
It can top up your State Pension if you have a low income.
Until April 2010 the qualifying age for receiving Pension Credit was 60, but it is now being increased each year and will reach 66 by October 2020.
Pension Credit is made up of 2 parts: Guarantee Credit and Savings Credit. Depending on your circumstances, you may be entitled to either one, or both parts.
For both parts of Pension Credit, you must be present in Great Britain or Northern Ireland, be ‘habitually resident’ and have a ‘right to reside’ in the UK, and not be subject to immigration control.
What is Guarantee Credit?
This can top up your income (such as your State Pension) to a set amount, to provide you (and your partner, if you have one) with a basic income to live on.
Extra amounts will be added if you have certain housing costs (such as mortgage interest), a severe disability or caring responsibilities.
Even if you do not get much Guarantee Credit, it is always worth claiming as it can give access to other benefits (see below).
How is Guarantee Credit calculated?
The Guarantee Credit is calculated by comparing your income with a set figure (the ‘Appropriate Minimum Guarantee’). If your income is less than this, you are paid the balance as Guarantee Credit.
The Appropriate Minimum Guarantee consists of a standard rate of £159.35 a week if you are a single person and £243.25 a week for a couple. If your weekly income is less than this, Guarantee Credit will top it up to this amount. You may receive additions to this standard rate:
- Severe disability – single person: £62.45
- Severe disability – couple (one qualifies): £62.45
- Severe disability – couple (both qualify): £124.90
- Carer: £34.95
You may also get additions to the standard rate if you are an owner-occupier and have a mortgage or other qualifying housing costs.
All of your income is taken into account when calculating the Guarantee Credit, unless it is specifically ignored (for example, Disability Living Allowance, Personal Independence Payment (PIP), Attendance Allowance and Housing Benefit are all ignored).
Earnings are taken into account after tax, National Insurance contributions and half of any contributions to a private pension are deducted. A small additional amount of your earnings is ignored: between £5 and £20 a week, depending on your circumstances.
Savings below a threshold of £10,000 will have no effect on your entitlement. You will be counted as having an extra £1 a week income for every £500 (or part of £500) of savings that you have above £10,000. Certain types of capital, such as the value of your home, personal possessions and the surrender value of insurance policies will be ignored.
What is Savings Credit?
Savings Credit was intended as an incentive for people with a modest income to save for retirement.
Savings Credit is currently being phased out. It may still be paid if you (and your partner, if you have one) are over 65, had reached State Pension age by 6 April 2016 and have qualifying income above a certain level.
The Savings Credit calculation is complex and the amounts paid are relatively small: the maximum you can get is £13.20 a week if you are single or £14.90 a week for a couple. For more information on your likely entitlement, visit the Gov.uk Pension Credit calculator.
How do I claim Pension Credit?
In England, Scotland and Wales, call the Pension Credit claim line on 0800 99 1234 (textphone 0800 169 0133). In Northern Ireland, call 0808 100 6165 (textphone 0808 100 1165).
When you phone you will need:
- your National Insurance number
- information about any money you have coming in
- details of any savings and investments you have
- information on any housing costs you must meet (for example, mortgage interest payments)
- details of the bank account you would like the Pension Credit payments paid into
How does Pension Credit affect access to other benefits?
If you’re awarded the Guarantee Credit of Pension Credit, you may be entitled to:
- full help with your rent
- help with mortgage interest payments and certain other housing costs
- help from your local council towards your Council Tax
- help with NHS charges, vouchers for glasses and hospital travel fares
It may also allow you access to certain schemes or tariffs from your utility provider.
If you’re entitled to either part of Pension Credit, you may be able to get a Social Fund Funeral Payment to help with funeral expenses if a partner, child, close relative or close friend has died.