Benefits

Pension Credit

Pension Credit was introduced in October 2003. It replaced Income Support and the Minimum Income Guarantee for people aged 60 and over. It is split into two parts; the guarantee credit (which replaces income support) and the savings credit.

Guarantee Credit

To be entitled to guarantee credit you or your partner need to be aged 60 or over and have no income or income below the appropriate minimum guarantee credit, this is a similar calculation to the Income Support applicable amount calculation (see above).

If you receive the guarantee credit you should also be entitled to full Housing Benefit and Council Tax Benefit, free prescriptions and other health benefits, and social fund payments where applicable.

Savings Credit

Savings credit can be paid if you or your partner are over 65. It is intended to assist people who have savings or retirement income and who would ordinarily not receive any other additional benefit apart from their state retirement pension.

If you have savings over £6,000 this will effect any amount that you are entitled to receive. There is no upper limit to the savings that you can have.

How to claim

Claims can be made by calling the Pension Credit Application line on 0800 99 1234 (text phone 0800 169 0133).

To find out more about the Pension Credit visit The Pension Service web site which gives useful information. You can also download a claims form.

Approaching Pension Age

Notification

You will probably have had a letter from the Benefits Agency four months before your birthday. If you haven't had a letter get in touch with the Pensions section at your local Benefits Agency as they probably haven't got your address up to date on the National Insurance computer records.

The letter will tell you how much Retirement Pension you can expect to receive, but will only give details up to the end of the last tax year (5th April). It's possible that the position will change slightly by the time your birthday comes around, particularly if you are still working and paying National Insurance contributions, or if your birthday falls between 6th April and 6th August.

If you are claiming Incapacity Benefit at the moment you probably won't have any choice because it will usually stop when you reach pension age. It is possible to remain on Incapacity Benefit if you are receiving the short-term rate, although it might be reduced if your Retirement Pension would have been reduced through not paying enough National Insurance contributions. It may be advisable to remain on short-term Incapacity Benefit if the following circumstances apply:

You already have to pay Income Tax because you have other income (Retirement Pension is taxable but Incapacity Benefit isn't)
You are not entitled to the full rate of Retirement Pension and you are terminally ill or getting the highest rate of Disability Living Allowance care component (check that the amount of Incapacity Benefit you would get after 196 days is more than your pension would have been).

In most other cases you might as well claim your Retirement Pension now as you are unlikely to be any worse off, and you could get more money than you are getting now.

Severe Disablement Allowance

If you are claiming Severe Disablement Allowance (SDA) you can continue to claim it after pension age and also claim Retirement Pension. If your SDA is more than your pension you will find that your pension is topped-up by the difference. If your SDA is less than your pension it will be wiped out. You won't be any worse off.

If you are not already on any benefits

If you are not on any benefits you have the choice of deferring your pension to earn increments (interest). Be warned that the interest rate is very low, and it is quite likely that you will not make up the money you would have received if you took your pension now. Remember that Retirement Pension is taxable, so if you are already paying Income Tax on other income there might be an advantage to deferring your pension. Also remember that you can still receive your Retirement Pension even if you are working.