Pension Credit explained

As many as 1.3m households could be missing out on as much as £3,000 a year by failing to claim Pension Credit, according to government figures.

Two in five of those who could claim Pension Credit don’t – often because they aren’t aware they’re eligible or don’t know how to go about submitting a claim.

If you think you are entitled to Pension Credit, it’s vital that you claim it, as it could provide you with valuable retirement income, and it could help you qualify for other benefits. For example, claiming Pension Credit also means that if you’re aged 75 or above, you’ll continue to be eligible for a free TV licence when licensing rules change on 31 July 2020.

Here’s what you need to know.

What is Pension Credit?

Pension Credit is a means-tested benefit which you may be eligible to claim once you’ve reached State Pension age if your weekly income is below a certain level.

You may be entitled to Pension Credit even if you have savings or own your own home.

Claiming Pension Credit may provide you with access to a range of other benefits such as help with housing costs, council tax or heating bills, so it’s well worth finding out if you qualify.

How Pension Credit works

It’s made up of two different parts, the Guarantee Credit and the Savings Credit. Here, we explain how both elements work, how much you might get, and how to go about making a claim.

Guarantee Credit

The Guarantee Credit part of Pension Credit, as its name suggests, tops up your income to a guaranteed weekly amount, which in the 2020/21 tax year is £173.75 if you’re single, or £265.20 if you’re in a couple.

Savings Credit

If you reached State Pension age before 6 April 2016, you may also be eligible for Savings Credit. This could give you up to £13.97 extra a week if you’re single, or £15.62 if you’re a couple.

Savings Credit won’t be available to you if you reach State Pension age after 6 April 2016.

Additional payments

Depending on your circumstances, if you qualify for Pension Credit, you may also be eligible for additional payments which will supplement the amounts shown above.

Child addition

If you’re responsible for a child or young person – perhaps, for example, you are bringing up your grandchild if your child is unable to do so – you might qualify for extra Pension Credit, known as the ‘Child Addition’. You’ll typically get £54.32 for each child you’re responsible for, or £64.82 a week if the child was born before 6 April 2017. You may be entitled to a higher weekly payment if the child you’re caring for is disabled.

To qualify for the Child Addition, the child or young person usually must live with you and be under the age of 20. You won’t be eligible for the child addition if you’re already claiming Tax Credits.

Carer addition

If you’re a carer who looks after someone who can’t look after themselves, you might also be eligible for an extra amount called the Carer Addition, which is worth up to £37.50 a week, or £75 if both you and your partner qualify. You’ll usually be eligible for the Carer Addition if you receive Carer’s Allowance, or if you fulfil the conditions to receive Carer’s Allowance but can’t be paid it as you get State Pension or another benefit instead.

These benefits can make a big difference so it’s worth contacting the Pension Service helpline on 0800 731 0469 if you’re not sure whether you’re eligible for the Child Addition or the Carer Addition.

Find out if you qualify

Since 15 May 2019, Pension Credit eligibility has changed, so that if you’re in a couple, you’ll only qualify for the Guarantee Credit element of Pension Credit if you and your partner have both reached State Pension age, or if one of you is getting Housing Benefit for people over the State Pension age. Your weekly income as a couple must be less than £265.20 to qualify.

If you’re single, you may be eligible for Guarantee Credit if you’ve reached State Pension age and your weekly income is less than £173.75.

You’ll stop getting Pension Credit if you start living with a partner who is under State Pension age. You can only start getting it again once they reach the State Pension age.

You can find out if you’re eligible for Pension Credit and how much you can get using the Pension Credit calculator.

How to claim Pension Credit

You can make a Pension Credit claim by phone using the Pension Credit claim line on 0800 99 1234. If you’d rather make a paper application, you can request one on the above number, , or you can download and print a Pension Claim form here.

When you apply for Pension Credit, you’ll be asked about your income. This includes any money you get from the State or other pensions, most social security benefits such as Carer’s Allowance, and any earnings. You’ll also be asked if you have any savings or investments over £10,000. You can have up to this amount without it having any impact on your Pension Credit. If you have more than £10,000 in savings and investments, it’ll be assumed you earn £1 of income a week for every £500 or part £500 above the £10,000 threshold. For example, if you have £11.300 in savings and investments, £3 will be added to your weekly income.

Benefits such as Attendance Allowance, Housing Benefit, Disability Allowance or any Council Tax reduction won’t be factored into calculations when determining whether you’re eligible for Pension Credit.

You’ll also be asked for details of your housing costs along with your bank account details and your National Insurance number, so it’s a good idea to have these to hand before you call.

What Pension Credit means for other benefits

If you do qualify for Pension Credit, it might help you get certain other benefits too.

For example, if you get the Guarantee Credit part of Pension Credit, you may also get your Council Tax paid in full.

If you pay rent to live in your property, you may be eligible to get your rent paid by Housing Benefit, or you may qualify for help with mortgage interest and service charges if you own your home.

If you’re aged 75 or over and receive Pension Credit, you’ll also qualify for a free TV licence. Previously all over-75s were eligible for a free licence, but from 1 August 2020, they will only be available to households receiving Pension Credit. Those who aren’t claiming Pension Credit will have to pay £157.50 a year for their TV licence. You can find out more about the TV licensing changes for those over 75 here.

Where to go for help

There are several charities and organisations which can advise you which benefits you might be entitled to and can help you submit a claim.

These include Turn2us, which can assess your eligibility for benefits through its Turn2us benefits calculator or by phone on 0808 802 2000. The site also has a free benefits calculator which you can use to see what you qualify for.

Alternatively, you can get help from Citizens Advice. You can search for your local Citizens Advice here.

To find out more about how Pension Credit works, visit the government’s website here.

Have you checked whether you’re eligible for Pension Credit, or are you already claiming it? If you’d like to let us know how easy or difficult you found it to apply for, you can get in touch via [email protected] or leave a comment below.

Links with an * by them are affiliate links which help Rest Less stay free to use as they can result in a payment or benefit to us. You can read more on how we make money here.

If you’re considering getting professional financial advice, VouchedFor is offering Rest Less members a free pension check with a local advisor. There’s no obligation but once you’ve had your review, the advisor will discuss the potential for an ongoing paid relationship if you think it might be useful to you.


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