PENSION CREDIT

 


 
 
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Pension Credit provides financial support for people that meet certain eligibility criteria in order to raise their incomes to a minimum level specified by central government. It was introduced in 2003 and replaced the Minimum Income Guarantee for pensioners, which itself was a renaming of the benefit that could be received by pensioners from the Income Support system. Approximately four million people are eligible to claim pension credit but around a third of people that are entitled do not claim it. Pension Credit is means tested and its purpose is to prevent retired individuals on the lowest incomes from having to live in poverty. There are two components: Guarantee Credit and Savings Credit.  Guarantee Credit, is paid if the income of the applicant and partner, including notional savings income, is less than a level stipulated by the government.  Guarantee Credit tops up the weekly income of people to certain amounts. In 2013, the amounts are £145.40 per week for a single person and £222.05 for a couple. If income is below these levels pension credit will be paid to increase income to these amounts.  People that have attained the qualifying age for Pension Credit Guarantee Credit should not have to live on weekly incomes lower than the stipulated levels. The weekly amounts can be increased depending upon the circumstances of the claimant, for example if they are severely disabled or have caring responsibilities for another individual. The amounts can also be increased if people have to meet certain costs of housing (e.g. mortgage interest).

Those receiving the Guarantee Credit part of Pension Credit have since its introduction been entitled to get full Council Tax Benefit. This benefit has been replaced by the Council Tax Reduction scheme; however, financial assistance continues to be given. People that receive the guarantee part of Pension Credit can obtain full council tax reduction. The amount of council tax reduction a claimant receives may be less if there is a non-dependent adult living in the household. Those receiving the Guarantee Credit part of Pension Credit are also entitled to full Housing Benefit. Towards the end of 2014, it is planned to replace housing benefit with housing credit, and this will be included in pension credit for those entitled to receive it. Guarantee Credit therefore entitles people that are eligible to claim it to have their entire rent and council tax paid for. The age at which a person may be entitled to claim Guarantee Credit is the same as the retirement age for women and it will increase in line with the increases in the women’s retirement age that are scheduled to take place. For women the minimum age of entitlement to claim pension credit is the same as the state pension age, but for men the state pension age can be different from the pension credit age. In August 2013, for example, the lowest age for claiming pension credit and the retirement age for women is sixty-one years and six months. The state pension age is to increase for both men and women and is due to reach 66 by 2020. This change will effect the qualifying age for pension credit. By the year, 2020 The Pension Credit qualifying age will increase to sixty-six. To be eligible for pension credit a person must live in Great Britain and have reached the relevant qualifying age. People can still be entitled to pension credit if they have a small pension or some savings. The pension credit system is open to homeowners and those living with a grown up family. Pension Credit is tax-free and people can still be entitled to receive it even if they have not paid National Insurance contributions

Savings credit provides additional financial support to those who have saved for retirement, for example if they have a pension or savings. To be eligible for savings credit the applicant or partner must have reached the age of 65. Savings Credit is intended to provide an incentive for people to save towards a pension during the time they are working. It provides financial help to those in retirement on low incomes but that also have savings or a personal pension. Savings Credit can be paid with Guarantee Credit or it can be given separately. The amounts payable in savings credit can be as much as £18.06 a week for single people and £22.89 a week for those with a partner. The upper limits of eligibility for savings credit are approximately £190 a week for single people and £279 a week for those with a partner. People can still be entitled to receive savings credit if their weekly incomes are up to these amounts. The levels can be increased for severely disabled people, those caring for other people, and those having to meet housing costs (e.g. paying mortgage interest).

Factors to take into account when determining eligibility for pension credit are the age and weekly income of the applicant, and if they have any savings. If applicants are under sixty-five, is weekly income under £145.40 for single people and £222.05 for couples. If they have savings, is the amount less than £10,000? If the applicants are, over sixty-five, is income less than £190 for single people or £279 for couples, and savings under £10,000. In general, people below the relevant income and savings levels applicable to their age can be entitled to pension credit. It can still be possible for people with savings or income above these levels to receive pension credit. Further information can be obtained from the government pension credit calculator. Pension credit is tax-free and can be claimed by people that live in Great Britain and satisfy the relevant age and income requirements. The pension credit system is funded from taxation and people are not required to have made National Insurance payments to claim it.

In order to qualify for pension credit a person must satisfy relevant age and residency regulations. People may be entitled to pension credit if they or their partner have attained the minimum qualifying age. If a person is not old enough to qualify but their partner has reached the minimum age then the partner may be eligible to claim. To obtain pension credit a person must also satisfy residency requirements. They must live in Great Britain, have the right to reside and be habitually resident in the common travel area – the UK, the Isle of Man, the Channel Islands or the Republic of Ireland; or in addition to having the right to reside in the UK, they are treated as being habitually resident in the UK. Certain people however may be exempt from the test of showing habitual residence (for example someone with the right of permanent residence in the United Kingdom under the laws of the EC, or a person granted humanitarian protection.) There are several categories of people that may be exempt from showing habitual residence - see government websites for  further information. People that have come to Great Britain from another country may also be entitled to pension credit depending upon their circumstances including residence and immigration status. There may in addition be cases where people can keep pension credit if they temporarily leave the country.

 

 

 

 

 

 

 

 

 

 

 

 


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