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Pension Credit 101: What It Is and What It Does

Updated: Aug 28, 2022

Your pension credit can make a huge difference in the amount of money you have to spend every month once you stop working. If you have enough pension credit saved up, you may be able to qualify for the full Basic State Pension, which guarantees an income of at least £175 per week before tax.

On the other hand, if you haven’t been putting any money into your National Insurance account during your working years, you may only qualify for the Guarantee Credit of £73.10 per week before tax, which isn’t enough to live on.

Pension Credit
Pension Credit

What is Pension Credit?

Pension credit is a top-up benefit for people who have reached state pension age. The amount you get is based on your personal circumstances and how much money you have coming in.

Pension credit can help boost your income to a minimum level, which is currently £155.60 per week for single people and £248.80 per week for couples.

It can also give you extra money to help with housing costs, council tax, and other bills.

You can find out more about what this means for you by calling the Department of Work and Pensions on 0800 731 7898.

How much you can get with Pension Credit

The amount of pension credit you can get depends on your personal circumstances. If you're single, you could get up to £155 a week. If you're part of a couple, you could get up to £248 a week.

You may also be able to get an extra amount for any children or young adults in your care. The extra amount you could get is called the 'child element'. You might also be able to get an extra amount if you’re disabled or have paid enough National Insurance contributions.

Pension credit will increase with inflation each year, so it will always keep pace with rising prices - it's never frozen at one level.

What does Pension Credit do?

As well as helping people live better lives by providing them with more money each week, pension credit has many other advantages too. For example, if you are getting the basic state pension plus two or more other pensions (including SERPS), then your entitlement to full-rate social security benefits such as housing benefit and council tax relief will be based on the full rate of pay from all sources rather than just one.

Who qualifies for this benefit?

To qualify for Pension Credit, you must be at least 65 years old. If you’re under 65 and have a long-term disability, you may also qualify. You (or your partner) must have built up enough National Insurance contributions.

You must also have an annual income below a certain level, which is set by the government. This level is different if you live alone or with a partner.

If you’re eligible for Pension Credit, you’ll get two payments:

• The Guarantee Credit tops up your weekly income to a guaranteed minimum level.

• The Savings Credit is an extra payment for people who saved money towards their retirement, for example, by paying into a private pension.

How to claim your free money from the government

You've paid into the system for years, and now it's time to claim your pension credit. Here's how.

Pension credit is a government benefit which can be claimed by people of working age who are in low-income households.

Some people have a pension from their job or previous employment; others may have saved up money in their personal pensions or investments that provide an income from which they live.

Pension Credit Conclusion

Pension credit is a top-up benefit for people aged 65 or over who have a modest income. If you get Pension Credit, you could also get help with your Council Tax bill and health costs.

In the UK, the government provides two types of pension credit- the basic state pension and the new state pension. The amount of money you get from each type of pension credit depends on your age and how much National Insurance you have paid over your working life.

If you are eligible for Pension Credit, you will receive a certain amount of money each week to top up your income. This money is paid into your bank account every four weeks.

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