Pension Credit, is a means-tested benefit for people aged 60 and over.

Pension Credit has two elements:

1. the 'guarantee credit' which replaced income support (IS) for people aged 60 and over.
2. the 'savings credit' for people aged 65 and over, which is intended to provide extra money for people who have modest savings.

Guarantee credit is calculated in a similar way to IS. If your income is below a certain level, known as the 'appropriate minimum guarantee', the guarantee credit makes up the difference.

Savings credit can be paid if you or your partner is over 65.

Pension Credit can meet mortgage interest payments and other housing costs. You may get Housing Benefit (HB) and Council Tax Benefit (CTB) to help with rent and council tax.

If you get the guarantee credit, you will be passported to full HB/CTB and you may also be entitled to help with health costs such as free dental treatment and help with hospital fares. If you receive either or both parts of the credit you may receive help from the social fund and energy efficiency grants.

WHO CAN CLAIM PENSION CREDIT?

To claim Pension Credit you must be aged 60 or over. If you have a partner, they can be younger.

Only one member of a couple can claim.

You must be present in Great Britain, habitually resident and not subject to immigration control.

Pension Credit can be paid for the first 4 or 8 weeks of a temporary absence from Britain. There is no limit to the number of hours you can work, but most earning are taken into account.

There is no capital limit for Pension Credit, but any capital over £6,000 will be counted as generating income (see 6 below).

CALCULATING YOUR GUARANTEE CREDIT

Guarantee credit is calculated by comparing your 'appropriate minimum guarantee' with your income. Your appropriate minimum guarantee always includes a 'standard minimum guarantee' which is:

• single claimant - £124.05
• couples - £189.35

In addition, your appropriate minimum guarantee can include:

• An additional amount for severe disability of £50.35 a week for a single person or couple where one partner qualifies, or £100.70 for a couple where both qualify. The rules for this addition are the same as those for the IS severe disability premium.
• An additional amount for carers of £27.75 worked out in the same way as the IS carer premium.
• An amount for any eligible housing costs such as mortgage interest.
• A 'transitional' extra amount if you were getting IS or income-based jobseeker's allowance immediately before you start to get Pension Credit, and they were payable at a higher rate than the Pension Credit.

Pension Credit does not include any amounts for children. If you have children, you will need to claim child tax credit.

Your income is compared to your appropriate minimum guarantee. If your income is less, the difference is paid as your guarantee credit.

CALCULATING YOUR SAVINGS CREDIT

Savings credit may be paid if you or your partner are 65 or over and have 'qualifying income' above your 'savings credit threshold'.

Savings Credit Thresholds Per Week

• Single Person - £91.20
• Couple - £145.80

Some people will receive savings credit in addition to guarantee credit; others will receive only savings credit.

The maximum amount of savings credit payable is £19.71 a week for a single person and £26.13 for a couple.

The calculation is as follows:

• Step 1: Work out your total income.

This is the same figure used in the guarantee credit calculation (see 5 below for how income is calculated).

• Step 2: Work out your appropriate minimum guarantee.

Again this is the figure used for guarantee credit.

• Step 3: Work out your 'qualifying income'.

This is your total income used to calculate guarantee credit but excluding working tax credit, incapacity benefit, contribution-based jobseeker's allowance, severe disablement allowance, maternity allowance or maintenance payments made by a spouse/civil partner or former spouse/civil partner.

• Step 4: Compare the 'savings credit threshold' with your qualifying income.

If your qualifying income is the same as or less than the savings credit threshold (see above) you will not be entitled to savings credit. If your qualifying income is more than the threshold make a note of the difference and proceed to Step 5.

• Step 5: Calculate 60% of the difference from step 4.

Work out 60% of the difference between the savings credit threshold and your qualifying income. If the result is more than the maximum savings credit figure of £19.71 for a single person (or £26.13 for a couple), use the relevant maximum savings credit figure instead.

• Step 6: Calculate the savings credit.

If your total income is the same as, or less than your appropriate minimum guarantee your savings credit will be the figure you arrived at in Step 5.

If your total income is more than your appropriate minimum guarantee, you must work out 40% of the difference between your total income and your appropriate minimum guarantee. You then deduct this 40% figure from the amount you arrived at in Step 5.

The calculation for savings credit is clearly quite complicated. If you are not sure if you qualify then you may want to apply anyway.

You can also find more information and examples of the calculation in the DWP Guide to Pension Credit (PC10S). You could get advice from The Pension Service or a local advice agency about your likely entitlement, or look at the Pension Credit calculator on The Pension Service website: www.thepensionservice.gov.uk

INCOME

You need to add up your income to work out any entitlement to Pension Credit. Some types of income, including state and private pensions are counted in full; some types of income are fully disregarded and others are partially disregarded.

The following types of income are counted in full:

• State pensions.
• Occupational and private pensions.
• Annuities.
• Retirement annuity contracts.
• War disablement and war widows/ers pensions (but see below for disregards).
• Other types of pensions including civil list pensions and those paid to victims of Nazi persecution.
• Most social security benefits (except those listed below).
• Earnings (but see below for partial disregards).
• Working Tax Credit.
• Payments from boarders, lodgers or sub-tenants (but see below for partial disregards).
• Regular payments from trust funds in most circumstances - but see below.
• Payments from a spouse/civil partner or former spouse/civil partner.
• 'deemed income' from capital over £6,000.
• Income from Financial Assistance Scheme and Pension Protection Fund.

Forms of income that are completely disregarded include:

• Attendance allowance, disability living allowance, constant attendance allowance and war pensioners mobility suplement.
• Housing benefit and council tax benefit.
• Christmas bonus.
• Social fund payments including the winter fuel payment.
• Bereavement payments.
• Child benefit and child special allowance, child tax credit, guardian's allowance.
• Increases for dependent children paid with certain other benefits.
• Charitable and voluntary payments (except for voluntary payments from a spouse/civil partner or former spouse/civil partner, which are counted in full).
• Payments, other than social security benefits or war pensions, paid as a result of a personal injury that you or your partner receive.
• Income from certain types of equity release schemes that do not provide an income through an annuity.
• Actual income from capital.
• The war widow's/widower's supplementary pension and some additions paid with war disablement pensions.
• Payments from your local authority social services department for personal care.
• Any other types of income that are not specified in the legislation as being counted.

Forms of weekly income that are partially disregarded include:

• £5 of your earnings from work if you are single or £10 if you are a couple. A higher £20 disregard applies in some situations, eg for some disabled people or carers. The rules are similar to those for income support but there are minor differences; for details contact an advice centre or The Pension Service.
• £10 of the total of any income from a war widow's/widower's/civil partner's pension, war disablement pension; a guaranteed income payment under the new Armed Forces and Reserve Forces Compensation Scheme or pension paid for victims of Nazi persecution or widowed parents/mother's allowance.
• £20 payment from a tenant, sub-tenant or boarder and, in the case of a boarder half of any payment above £20 is also ignored. The disregard applies to each tenant and/or boarder making payments.

If you have used the equity in your home to buy an annuity, any part of the income that is being used to pay the interest on the loan is ignored.

CAPITAL

Capital includes any savings, investments, land and property you own. If you have capital of £6,000 (£10,000 if you live in a care home) or less this will not affect your Pension Credit. There is no upper capital limit for Pension Credit but if you have capital of more than £6,000 (£10,000 in a care home) you will be counted as having an extra £1 a week income for every £500 (or part of £500) over this limit.

HOW TO CLAIM

You can make a claim in a variety of ways. You can ring The Pension Credit application line on Freephone 0800 99 1234 (you will be asked questions over the phone and then the application form will be sent to you to check and sign). You can also ring that number to get a form sent to you. You can write to: Freepost NAT 3780, PO Box 457, Mexborough S64 9ZZ. You can also send the tear-off coupon in leaflet PC1L. Pension Credit application forms are available from post offices, or print-off a claim form from the internet. Alternatively, an advice agency or local Pension Service staff can help you fill in the form on a face-to-face basis - either at an advice session or through a home visit.

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