Pension Credit
Encyclopedia
Pension Credit was introduced in the UK in 2003 by Gordon Brown
, then Chancellor of the Exchequer
, and was designed to lift a large number of the poorest retired people out of poverty. It replaced the Minimum Income Guarantee, which had been introduced in 1997. Pension Credit has two elements: Guarantee Credit is an income based benefit which is paid if the income of the applicant and partner (plus a notional income from savings) is below a certain level (£132.60pw for a single person and £202.40pw for a couple in 2010/11). The minimum age for claiming is rising in line with the increase in women's retirement age (see "Changes to the State Pension age"). It is currently just over 60, but by April 2020 the minimum age for claiming will be 65.
When the applicant or partner reaches 65 then the second element, Savings Credit, is also payable. Savings Credit is designed to "reward" people who saved for their pension during their working life. It therefore provides additional benefit to retired people who are not well off, but do have savings or a personal pension, and may not qualify for the full Guarantee Credit.
Anyone who is in receipt of the Guarantee Credit part of Pension Credit is also eligible for full Council Tax Benefit and Housing Benefit
. This can be a significant amount, ensuring that a retired person in this position has their Council Tax
and rent paid in full.
The amount of Pension Credit can be increased if the applicant and/or partner are in receipt of a disability benefit such as Disability Living Allowance
(DLA) or Attendance Allowance
(AA). This depends on whether the person in receipt of the benefit is (or is treated as) living alone. No one must be claiming Carers Allowance for looking after them. Claimants in receipt of the middle or higher rate care component of DLA or either rate of AA can qualify. The additional amount is called Extra Amount for Severe Disability (£53.65pw in 2010/11) and is added to the standard amount. The rules are complex and there are exceptions so anyone with any queries are encouraged to contact the Pension, Disability and Carers Service via Direct.gov.uk or an agency with expertise in benefits, such as Citizens Advice Bureau
or Age UK.
All amounts shown above are weekly amounts.
Eligibility may be estimated on a government website.
Gordon Brown
James Gordon Brown is a British Labour Party politician who was the Prime Minister of the United Kingdom and Leader of the Labour Party from 2007 until 2010. He previously served as Chancellor of the Exchequer in the Labour Government from 1997 to 2007...
, then Chancellor of the Exchequer
Chancellor of the Exchequer
The Chancellor of the Exchequer is the title held by the British Cabinet minister who is responsible for all economic and financial matters. Often simply called the Chancellor, the office-holder controls HM Treasury and plays a role akin to the posts of Minister of Finance or Secretary of the...
, and was designed to lift a large number of the poorest retired people out of poverty. It replaced the Minimum Income Guarantee, which had been introduced in 1997. Pension Credit has two elements: Guarantee Credit is an income based benefit which is paid if the income of the applicant and partner (plus a notional income from savings) is below a certain level (£132.60pw for a single person and £202.40pw for a couple in 2010/11). The minimum age for claiming is rising in line with the increase in women's retirement age (see "Changes to the State Pension age"). It is currently just over 60, but by April 2020 the minimum age for claiming will be 65.
When the applicant or partner reaches 65 then the second element, Savings Credit, is also payable. Savings Credit is designed to "reward" people who saved for their pension during their working life. It therefore provides additional benefit to retired people who are not well off, but do have savings or a personal pension, and may not qualify for the full Guarantee Credit.
Anyone who is in receipt of the Guarantee Credit part of Pension Credit is also eligible for full Council Tax Benefit and Housing Benefit
Housing Benefit
Housing Benefit is a means tested social security benefit in the UK that is intended to help meet Housing costs for rented accommodation. The primary legislation governing Housing Benefit is the Social Security Contributions and Benefits Act 1992. Operationally, the governing Regulations are...
. This can be a significant amount, ensuring that a retired person in this position has their Council Tax
Council tax
Council Tax is the system of local taxation used in England, Scotland and Wales to part fund the services provided by local government in each country. It was introduced in 1993 by the Local Government Finance Act 1992, as a successor to the unpopular Community Charge...
and rent paid in full.
The amount of Pension Credit can be increased if the applicant and/or partner are in receipt of a disability benefit such as Disability Living Allowance
Disability Living Allowance
Disability living allowance is a non-means-tested, non-contributory benefit which can be claimed by a UK resident aged under 65 years who has care and/or mobility needs as a result of a mental or physical disability...
(DLA) or Attendance Allowance
Attendance allowance
Attendance allowance may refer to:*Attendance allowance - a per diem payment made to public representatives to cover costs of attending an assembly away from home...
(AA). This depends on whether the person in receipt of the benefit is (or is treated as) living alone. No one must be claiming Carers Allowance for looking after them. Claimants in receipt of the middle or higher rate care component of DLA or either rate of AA can qualify. The additional amount is called Extra Amount for Severe Disability (£53.65pw in 2010/11) and is added to the standard amount. The rules are complex and there are exceptions so anyone with any queries are encouraged to contact the Pension, Disability and Carers Service via Direct.gov.uk or an agency with expertise in benefits, such as Citizens Advice Bureau
Citizens Advice Bureau
A Citizens Advice Bureau is one of a network of independent charities throughout the UK that give free, confidential information and advice to help people with their money, legal, consumer and other problems....
or Age UK.
All amounts shown above are weekly amounts.
Eligibility may be estimated on a government website.