By Tom Philips at April 17, 2024

Pension Credits: Eligibility, How it Works & How to Get It

Pension Credit is a great option for anyone who’s reached state pension age who wants to top up their income in retirement.

Whilst this can be a great help for lots of retirees, a study carried out by Gov.UK found that not enough pensioners are claiming it.

In fact, a study carried out by Gov.UK found that only 72% of all individuals at or over state pension age were aware of Pension Credit [1].

The same study also found that awareness around State Pension also decreases in age. In fact, only 62% of 85 year olds or older were aware of Pension Credit [1].

The study found that women are more likely to be aware of Pension Credit than men are and that White British individuals living in the UK were more likely to be aware of Pension Credit than respondents from other ethnic backgrounds [1].

Of those who responded to the study, over half of respondents who had some awareness of Pension Credit only had a very limited understanding of Pension Credit, meaning that they had heard the phrase before, but were not informed about what it involved or meant for retirees [1].

What is Pension Credit?

Pension credit is available to those who have reached state pension age. It is essentially extra money to help retirees cover their costs during retirement, if you are living on a low income. You are still able to get pension credit even if you have savings in your bank account, or if you own assets.

There are two main parts to pension credit. This includes Guarantee Credit and Savings Credit [2]. When you reach state pension age, you might qualify for one of these types of credit, or indeed both.

This will depend on a number of different factors. If you are hoping to apply for one or both, then it is important to understand the difference between the two.

Guarantee Credit is a top up to your weekly income and pension, to a minimum amount.

Savings Credit is a small top up for those who have a limited income or limited savings in the bank. You are only able to apply for Savings Credit if you reached state pension age before the 6th April, 2016.

Pension Credit Eligibility

In order to qualify for Pension Credit, you must have reached state pension age, be within the threshold for income and savings and live in the UK. You are able to apply for Pension Credit if you are still in employment, as long as your income is below a certain amount. In order to apply for Pension Credit, you do not need to show your national insurance record, unlike with State Pension [3].

In order to qualify for Pension Credit in the UK, you must live in England, Scotland, Wales or Northern Ireland and have reached State Pension age. Your weekly income must also be below £201.05 per week if you live alone, or below £306.85 if you live with a partner [3].

As previously mentioned, if you do live with a partner then you both need to have reached the State Pension age before applying for Pension Credit.

It is important to understand that you only have to live with another partner for this rule to be in place, and you do not have to be married or in a civil partnership.

If you want to qualify for Savings Credit and want to make a new claim, then you need to have reached 65 years old (for men) and 63 years old (for women) before the 6th April, 2016 [3].

If you’re over State Pension age but your partner isn’t

If you have reached State Pension age but your partner hasn’t yet, then you might not be able to make a new claim for Pension Credit until they reach the State Pension age.

You can however still make a new claim for Pension Credit if you reached the State Pension age before the 15th May, 2019 or if you have previously been claiming housing benefit since before the 15th May, 2019.

If these two things do not apply to you, then you might need to apply for Universal Credit instead.

Your eligibility for Pension Credit will largely be down to how much you have in your savings account, and how much you earn.

So, let’s look at that in a little bit more detail, as working out your total value in savings and assets can sometimes be tricky.

1. Working out your income and savings

In order to work out your income and savings amount, you will first need to establish how much you earn on a weekly basis. If you are still earning a pay cheque, you can do so by looking at your payslip, and dividing your total pay by 4.

On top of any actual income, you will also need to add on how much you earn each month from your private pension, from your state pension, or any benefits that you receive. This needs to be your total income, including everything listed here.

To work out what you have in assets and investments, you will need to consider a number of different factors. Some of these are listed below for you.

Any property you own, except the home you live in
If you have any shares or investments
Any money you have in a savings or bank account

Any savings or investments over the value of £10,000 will have an impact on your eligibility for Pension Credit. For every £500 above £10,000 in savings, you will be treated as having £1 a week of income.

Remember, if your weekly income is below £201.05 then you will qualify for Guarantee Credit, which will top up your income.

2. Check to see if you are eligible for Savings Credit

Savings Credit is the second part of Pension Credit, which is only available to those who reached state pension age before the 6th April, 2016.

In order to qualify for this type of support, you have to meet the savings credit threshold. This means that you need an income of at least £174.49 a week as an individual or £277.12 if you’re a couple [4].

The qualification and income rules work very differently to Guarantee Credit. For example, with Savings Credit, you do not count things such as working tax credits, incapacity benefits, ESA or disability allowance as income. You also do not count maintenance payments or maternity allowance as income.

If you qualify for Savings Credit, then the maximum amount you can get a week is £15.94 if you live alone and £17.84 if you live with someone else. Remember, you do not need to marry the individual to be classified as partners, you only have to live with them [4].

How your claim could be affected by pension pots

It is important to understand that your claim for Pension Credit might be affected by any pension pots you have. This includes any money in your pension that you are taking out or any money left in your pension pots.

This will only be taken into account if you have £10,000 or less in your savings or investments, including your pension pot(s).

If you have less than this amount, then it won’t affect how much Pension Credit you will get. If you have more than £10,000 then the amount you qualify for might be reduced.

How do I Claim Pension Credit?

You can apply for Pension Credit by visiting the Gov.Uk website, or by calling the Pension Service by calling 0800 99 1234. If you live in Northern Ireland, then you will need to call 0808 100 6165 instead.

Whilst on the phone to them, you will need a few things on hand. This will include your national insurance number, correct information about your income, your savings and your investments as well as your bank account details.

If you do not feel comfortable applying for Pension Credit over the phone or online, then you are able to make a paper application. If you are still struggling, then why not ask a family member or a friend to help you process your application.

You do not need to wait until your birthday to apply for Pension Credit. You can apply for Pension Credit up to 4 months before you reach state pension age.

How is Pension Credit paid?

Pension Credit is usually paid directly into your bank account. You can choose between getting your money on a weekly, fortnightly or monthly basis. If you want the money to go into someone else’s account, such as a power of attorney or an appointee, then you will need to say so.

Other Benefits you Qualify for if you get Pension Credit

The great thing about Pension Credit is that if you do qualify for it, then you automatically qualify for a range of other really useful benefits, too.

Even if you are happy with the amount of money you are getting from Pension Credit, you should still apply for these other benefits, as opting for a few of them can quickly add up. Some of the benefits you will also be able to apply for are listed below for you [5].

1. Council tax reduction

Likewise, if you qualify for Pension Credit, you are also entitled to the maximum council tax reduction.

Depending on where you live, your council might be able to cover your entire council tax bill. However, if you live with adults who are not classified as dependents, then your reduction might only be limited.

If you want to check to see where other or not you are eligible for council tax reduction, head over to the Gov.UK website.

2. Free TV Licence

If you qualify for Pension Credit, then you might be able to get a free TV licence, saving you around £159 a year [6].

There are some exceptions, however, so it is always worth checking. If you want to claim your free TV licence, then you need to head towards the TV licensing website. You can also call the TV Licencing helpline on 0300 790 6117.

3. Free dental treatment

One of the other benefits of qualifying for Pension Credit is that you also get access to free NHS dental care and treatments.

This includes free checkups and most treatment work. In order to gain access to free dental treatment, you do not need to apply for anything online.

Instead, simply declare that you gain access to Pension Credit at reception and your bill should be covered.

4. Warm home discount

The warm home discount gives you a discount on your energy bill, which is normally given to individuals by the end of March each year to those who earn under a certain amount.

You do need to be with certain suppliers, and you also need to apply in order to gain access to this benefit.

If you do qualify for the warm home discount, then you will get a letter between October and December each year telling you what you need to do next.

There are a number of Government energy grants, and using guides can often be helpful to work out what you can and can’t get.

5. Cold weather payments

You will only be eligible for a cold weather payment if the weather in your area sits at or below 0°C for 7 consecutive days in a row. This also has to sit between the 1st November and the 31st March.

6. Free home insulation and boiler grants

Pension Credit acceptance also means that you can get free cavity walls and loft insulation from your chosen energy provider. Likewise, if you broiler breaks down, then your energy provider might be able to provide you with a grant for a brand-new one.

7. Hospital travel expenses

If you need to go to the hospital and have substantial travel expenses and costs to get there, then you might be able to apply for your expenses to be covered.

You can only apply for these expenses to be covered if you have been referred to hospital by a GP, a hospital doctor or a dentist.

Even if you are accepted for this type of help, then you will still need to seek the cheapest form of transport to the hospital, rather than taking a helicopter to get there.

They will of course take into account your health condition or any mobility issues when accessing your expenses, so don’t worry too much if you have to take a taxi rather than a bus to get to hospital.

When you arrive at the hospital, make sure you show your benefit award letter to the person on reception and they will be able to process your expenses for you. You must also show your taxi receipt or bus ticket in order to qualify.

8. Housing Benefit

If you receive Pension Credit, then you are also eligible for the maximum amount of housing benefit that you can receive.

Whilst this is never a fixed amount, you could end up saving hundreds of pounds a month. You can then put this money towards rent.

When you apply for Pension Credit, the individual who is processing your application will also want to know whether or not you already claim housing benefit.

9. Other discounts

In addition to all of these great discounts, you might also be eligible for other discounts, like your water will. Each supplier is different, so it is always worth checking with yours to see if you would qualify.

Likewise, you might also be eligible for broadband offers, including free access to the BT Home Essentials broadband service.

Changes to Pension Credit for people with children from 1 February 2019

It is important to understand that as of February 2019, Pension Credit increases to an additional amount for anyone who is also responsible for looking after children.

This child must be under 16 years old and the child must live with you on a day-to-day basis. They must also be in full-time education or training.

For more information on this, take a look on the Gov.UK website.

Changes to Pension Credit for couples from 15 May 2019

It is also important to understand that as of the 15th May, 2019, you are only able to claim Pension Credit if both you and your partner are of state pension age.

If only one of you has reached the state pension age, and the other has not, then you will need to wait until they reach the state pension age before applying for Pension Credit.

Does equity release affect Pension Credit?

Your private and state pension will not be affected by taking out an equity release loan. However, if you receive Pension Credit, and more specifically Guarantee Credit, then your entitlement to this might be affected by taking out an equity release loan.

This is because Pension Credit is classified as a means-tested benefit, which is affected if you take out an equity release loan as this will increase the amount of savings you have in the bank.

FAQ’s surrounding Pension Credit

1. Can I apply for Pension Credit if I arrive in the UK from outside of Great Britain?

If you want to apply for Pension Credit, then you must live in either England, Scotland or Wales.

If you have arrived to live in the UK from another country, then you must not be subject to immigration control, meaning that there can’t be any restrictions surrounding your right to receive financial help from the Government.

2. Can I leave Great Britain and keep getting Pension Credit?

If you leave the UK, then the Government might still be able to pay your Pension Credit for up to 4 weeks after you leave. If you have to leave for personal reasons, including a close death, then the Government might be able to pay up to 8 weeks of Pension Credit.

If you have to leave the UK for your own personal health reasons, in order to receive medical treatment, then the Government might be able to pay your Pension Credit to you for up to a total of 26 weeks.

However, in order to receive this benefit you will need to inform the Government before you leave the country.

3. Am I able to apply for Pension Credit if I’ve previously been rejected?

Yes, you are able to re-apply for Pension Credit if you have previously been rejected for it. You should only try to re-apply for Pension Credit if your circumstances have changed in that time. This will include a change to your savings, income or benefits entitlement.

4. Do I need to inform you if my circumstances change?

Yes, you will need to inform the Council or Government of any changes to your circumstances if you are already claiming Pension Credit. This will include any changes to your income, savings or benefits entitlement.

5. Can I challenge a Pension Credit decision?

Yes, you are able to challenge a decision made about your Pension Credit. You can challenge a decision if you have been told you can’t get Pension Credit or if you think that you are not receiving enough.

6. Can I get a backdated Pension Credit?

Yes, you can get backdated Pension Credit for up to three months, as long as you have satisfied certain conditions. If you think that you need your Pension Credit backdated, then you will need to inform the Government of this, as it will not happen automatically [8].

7. What happens if I go into a care home?

If you move into a care home, then you might still be able to claim Pension Credit. If you receive Pension Credit prior to moving into a care home, you will simply need to inform the Government of your change in circumstances.

It is important to note that if your partner moves into a care home, then you will need to inform the Government of this, as you will now be classified as a single person for Pension Credit purposes [8].