Pension Credit is a benefit for people who are over state pension age and are on lower incomes, and helps eligible retirees by boosting their weekly income. It has two parts; Guarantee Credit and Savings Credit, with each part providing a different level of supplementary income to those who need it.
Guarantee Credit tops up one’s weekly income to a guaranteed level of £177.10 for single pensioners, who would receive a monthly income of £708.40 in a standard four-week month, and £9,209.20 per year.
Pensioners who are married or in a civil partnership would have their weekly income boosted to a level of £270.30 each week, which would add up to £1,081.20 a month and £14,055.60 for a full year.
Savings Credit provides some extra income if one has made some provision towards their retirement through savings, or via a pension other than the basic state pension. For single retirees, the extra money provided by Savings Credit can be up to a maximum of £14.04 per week.
This would allow them to pick up an additional £56.16 each month, and boost their income by £730.08 for the year. Those who are married or in a civil partnership could get up to an extra £15.71 a week, which would allow pensioners to stack up £62.84 more each month, or £816.92 a year. These figures are all for the 2021/22 tax year.
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Another potentially great benefit of Pension Credit is that people who are over 75 and claim Pension Credit can also claim a free TV Licence worth £159. By combining that saving with the maximum amount of extra income afforded by Savings Credit, a single pensioner could benefit from an extra £889.08 each year, or £975.92 for a couple.
One can apply for Pension Credit up to four months before they want to start receiving it, thus avoiding having to wait around to receive their first payment. A claim can be made any time after one reaches state pension age, but claims can only be backdated for a maximum of three months. This means one could get up to three months of Pension Credit in their first payment.
However, there are some conditions that must be met in order for someone to be eligible to receive the different parts of Pension Credit. Only people who reached state pension age before 6 April 2016 qualify to claim the Savings Credit part of Pension Credit.
People who reached state pension age on or after 6 April 2016 can still get the Guarantee Credit part of Pension Credit. Even if one is only entitled to a small amount of Pension Credit, it may be worth claiming as it could help them qualify for other benefits, as well as providing some additional income.
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Some people may even be able to access a higher level of Pension Credit, bringing in even more extra income each week. Those who are disabled, have caring responsibilities or are responsible for paying certain housing costs, such as mortgage interest payments may be eligible.
To claim Guarantee Credit, one needs to have reached state pension age, whereas to qualify for Savings Credit, one must have reached state pension age before 6 April 2016. The amount that can be claimed will depend on the savings and income one already has.
Although one must have reached the state retirement age in order to be eligible, Pension Credit can be claimed regardless of whether one has actually retired or not, meaning even those who are still working can apply.
The amount of Pension Credit that can be claimed will also depend on the pension pots one already has, which will be assessed when one applies for the benefit. After someone (or their partner) reaches state pension age, any lump sums that either of them draws out of their pension pots, and any moneyleft inthe pension pot will be taken into account when income is assessed.
For example, someone with a pension pot of £30,000 who has taken a lump sum of £10,000 from it will have a remaining pot of £20,000. Both amounts will be part of the assessment of income when calculating the level for benefit one is entitled to.
People who have left their pension savings alone will be assessed in a different way. The Department for Work and Pensions (DWP), HMRC or local council will check how much one would get if they had bought an annuity, which is when one sacrifices part of their pension and in turn receives a guaranteed income for life. This will then be taken into account one’s income is being assessed.
An assessment will also be done for people who have used their retirement income flexibly by keeping money in a pension pot and then taken income from it regularly, or as and when they want. The relevant authority will look at how much one would get if they bought an annuity, in the same way that people who have not drawn anything from their pension pot are assessed.
However, in this case, how much flexible income one has been taking is also taken into account, and whichever comes out as the higher amount will be used when one is assessed for benefits.
Applicants must be aware though that it is their responsibility to tell the DWP, HMRC or their local council if them or their partner has taken any money from their pension pot, and if one deliberately spends or give away money from their pension pot in order to get, or increase their benefits, their eligibility may be assessed again, and they may be treated as though they still have that money.
As well as any income or lump sum taken from one’s pension pot, other assets such as savings and investments could also count towards the benefit assessment.
Following some changes to the scheme from May 2019, couples can only make a new claim for Pension Credit if they fulfil certain criteria. Both parties in the couple must have reached state pension age, or alternatively if one party has reached state pension age and is claiming Housing Benefit for the couple, they may also apply for Pension Credit.
These changes only apply to new claims, and if someone already receives Pension Credit and their partner is under state pension age, they will continue to receive Pension Credit for as long as they qualify.
However, if one’s circumstances change and they lose their Pension Credit entitlement as a result, one will not be able to begin receiving it again until they qualify under the new rules. One will also lose their entitlement if they were single and claiming Pension Credit before 15 May 2019, but on or after that date began living with a partner who is under state pension age, until their partner eventually reaches state pension age themselves.
Even if a couple discovers that they do not qualify for Pension Credit under the new rules, they can both apply for Universal Creditinstead and supplement their income in that way.Internet Explorer Channel Network