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Pension Credit

Pension Credit
Published:  25 Feb at 9 AM
Pension Credit is a means-tested social security benefit introduced on 6th October 2003 and administered by the Pension Service. It is designed to provide those aged 60 and over with a minimum level of income and give extra cash to those aged 65 and over with modest incomes who have made savings for their retirement. Pension Credit has two parts to it - the Guarantee Credit and the Savings Credit. It is possible to receive either component of Pension Credit exclusively or a combination of both.

The Guarantee Credit element provides a guarantee of a minimum level of weekly income for single people (£132.60) and couples (£202.40). It is payable from age 60 and has essentially replaced the Minimum Income Guarantee (MIG). The individual applying must be at least 60, although their spouse can be younger.

The Savings Credit element is somewhat more complicated but essentially it is a reward for those who have attempted to make additional provision for their retirement over and above the Basic State Pension and who have a modest amount of income or savings. Savings Credit is payable from age 65. Either one or both individuals (in a couple) must be aged at least 65 in order to claim.

People are likely to be entitled to get some money from the Savings Credit element if the money they have coming in is up to £183.90 a week (single) or up to £270.12 a week (for couples). Savings Credit is currently worth up to £20.52 a week for a single person (£27.09 for couples).

Some may still be entitled to Pension Credit if their weekly income is more then the above thresholds if they or their spouse are severely disabled, look after someone who is severely disabled or have certain housing costs (e.g. mortgage interest payments).

As Pension Credit is means-tested, all forms of income, earnings and savings (capital) are taken into account. The first £10,000 of capital/savings will be ignored. For capital/savings over £10,000, the Pension Service will deem people to have an income of £1 a week for each £500 or part of £500 over that amount. The threshold was £6,000 before November 2009.

From 6 April 2010, the age from which people can get Pension Credit will gradually increase. This will be in line with the State Pension age becoming 65 for women as well as men by 2020. You can claim Pension Credit whether or not you are working, and do not need to have paid National Insurance contributions to get the benefit.

Claims for Pension Credit made on or after 6th October 2008 are only backdated for payment by up to 3 months.

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