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					Welfare Rights Training 2009
             Pension Credit

   Guarantees all over 60’s a minimum
    weekly income

   This is a brief guide to Pension Credit


Non-contributory. Income related & means

Taxable: No

Pension Credit (PC) has two parts:

Guarantee Credit - is for people aged 60 and over
and is calculated in a similar way to Income
Support. An amount known as an 'appropriate
minimum guarantee' is calculated. If your income is
below this minimum guarantee, the Guarantee
Credit makes up the difference.

Savings Credit –gives you extra money if you have
saved for retirement. It will only be paid if you or
your partner are over 65. It is intended to 'reward'
you for having income from earnings, savings or
pensions over the level of the basic State Pension.

You can get both of these parts if you satisfy the
rules. If you get Guarantee Credit you can be
passported to other benefits in a similar way to
Income Support (IS). In some cases Savings Credit
alone will be sufficient to do this.

Who can claim Pension Credit?

To claim PC you must be aged over 60 (or 65 for
Savings Credit). If you have a partner, they can be
younger than you. You must be present in Great
Britain, habitually resident and not be subject to
immigration control, in the same way as for IS. PC
can be paid for the first 13 weeks of a temporary
absence from Britain. Unlike IS, PC claimants can
work more than 16 hours a week.
           Guarantee Credit
Guarantee Credit is calculated by comparing your
 weekly appropriate minimum guarantee amount
 with your income. Your minimum guarantee always
 includes a 'standard minimum guarantee'.

 This is set at two rates:
 £130.00 for single claimants
 £198.45 for couples.

 These figures are the same as the IS personal
 allowance and pensioner premium combined.
             Guarantee Credit
Additional amounts are added and paid:

Severe disability (£52.85 for each qualifying
claimant or partner)

Carers (£29.50 each)

You qualify for these in the same way as for the Severe
Disability and Carer premiums in IS.

If you have children you will need to claim Child Tax Credit
         Guarantee Credit

The appropriate minimum guarantee will also
include any eligible housing costs (Mortgage
Interest), calculated in the same way as for IS.
            Savings Credit
 You can get Savings Credit of up to £20.40 a
  week if you are single or £27.03 if you are part
  of a couple.

 You are likely to be entitled to some Savings
  Credit if as a single person your income is less
  than around £181 a week and if as a couple
  your income is less than around £266

 However some disabled people, carers and
  homeowners with housing costs will be entitled
  to Savings Credit if their incomes are much
  higher than these minimum levels.
         Savings Credit
All assessments are based on the amount
of qualifying income weekly that you
have over a threshold figure which is:

£96 for single claimants
£153.40 for couples

If your qualifying income is below these
thresholds you cannot get Savings Credit.
        Savings Credit

Sample calculations - single people

If you are single and your qualifying
income is more than £96 a week but less
than £130.00 you will normally receive
60% or 60p Savings Credit for every £1
of your income you have over the
                 Example 1
Mr Brown has a state pension of £96.00 a week and
 an occupational pension of £25 a week making
 £121.00 weekly.

He will receive £9.00 Guarantee Credit to bring his
 weekly income of £121.00 up to the single person's
 rate of £130.00.

He will also get £15.00 Savings Credit (60% or 60p
 for every £1 of his qualifying income over £96.00
 which is £25 x 60% = £15) making his total weekly
 income £130 + £25 = £155.00.
If your weekly income was exactly £130.00 you will
normally receive the maximum weekly Savings
Credit of £20.40.

If you are single and your weekly income was more
than £130.00, the maximum Savings Credit of
£20.40 is reduced by 40% or 40p for every £1 of
weekly income you have over £130.00.

Normally if your income is £181 or above you will
not be entitled to Savings Credit.
              Example 2
Mrs Gray has a weekly income of £150.00
from her state and private pension.

This is £20 more than £130.00 so her
maximum weekly Savings Credit of £20.40 is
reduced by £8 (40% or 40p for every £1 of the
£20 excess).

She will now get Savings Credit of £12.40
weekly (£20.40 - £8).
Sample calculations - couples

If you are part of a couple and your joint
 qualifying income is more than £153.40
 a week but less than £198.45 you will
 normally receive 60% or 60p Savings
 Credit for every £1 of income you have
 over £153.40.
                 Example 3
Mr and Mrs Black have state pensions of £153.40
and an occupational pension of £35 making a total
of £188.40 a week.

They will receive £10.05 Guarantee Credit to bring
their pension incomes up to £198.45.

They will also receive £21 Savings Credit (60% or
60p for every £1 of the £35 qualifying income over
£153.40 making their total weekly income £219.45
(£198.45 + £21).
If you are part of a couple and your joint qualifying
income is exactly £198.45 weekly you will normally
receive the maximum Savings Credit for a couple of
£27.03 weekly.

If you are part of a couple and your joint income is
more than £198.45 weekly the maximum Savings
Credit of £27.03 is reduced by 40% or 40p for every
£1 that your income is over £198.45.

Normally if your income is £266 or above you will
not be entitled to Savings Credit.
                Example 4
 Mr and Mrs White have State Pensions of
  £153.40, an occupational pension of £30 and
  £25,000 savings (assumed to produce an income
  of £38) making a total of £221.40 a week.

 This is £22.95 more than the Guarantee Credit
  level of £198.45 weekly

 So the maximum Savings Credit of £27.03 is
  reduced by £9.18 (40% or 40p for every £1 of the
  £22.95 excess). They will receive Savings Credit
  weekly of £17.85 (£27.03 - £9.18).

If you are disabled, a carer or a
homeowner with certain housing costs
you may still get some Savings Credit
even if your income is a lot more than
£181 as a single person or £266 as a
The difference between
qualifying income and income

Almost all your weekly income is used
 to work out your entitlement to
 Guarantee Credit.

Only certain weekly qualifying income is
 used when working out your entitlement
 to Savings Credit.
 Income counted in full for Guarantee
          Credit purposes
State pensions;
Occupational and private pensions;
Retirement annuity contracts;
War disablement and war widow/ers (but see
below for partial and complete disregards);
0ther types of pensions including civil list
pensions and those paid to victims of Nazi
 Income counted in full for Guarantee
          Credit purposes

Most social security benefits (except those
listed below);
Earnings (but see below for disregards);
Working tax credit;
Payments from boarders, lodgers or sub-
tenants (but see below for disregards);
Regular payments from trust funds in most
circumstances – but see below;
Payments from a spouse or former spouse;
‘Deemed / tariff income‘ from capital over
Disregarded income includes:
 Attendance Allowance and Disability Living
 Housing benefit and council tax benefit;
 Christmas bonus;
 Social fund payments including the Winter Fuel
 Child benefit and Child Special Allowance;
 Increases for dependent children paid with
  certain other benefits;
 Charitable and voluntary payments (except for
  voluntary payments from a spouse or former
  spouse, which are counted in full);
  Disregarded income includes:
•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.
Partially disregarded income includes:
 £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 - for example for some disabled people or carers.
  The rules are similar to those for income support but there
  are minor differences;

 £10 of the total of any income from a war
  widow's/widower's pension, war disablement pension;
  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;
Partially disregarded income includes:
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.

Income from trust funds will be ignored if the trust fund
was set up from a lump sum received for a personal
injury. In other situations trust fund income is generally
taken into account but there are some exceptions for
discretionary payments.

Qualifying income for Savings Credit is more or less the
same as the income used to calculate Guarantee Credit
but does not include Incapacity Benefit, Contribution
Based ESA, Severe Disablement Allowance, Working Tax
Credit, Contribution Based Jobseeker's Allowance,
Maternity Allowance and any maintenance payments (it
also does not include any top up of Guarantee Credit).
              Capital / Savings
• If you have capital of more than £6,000 (£10,000 if
  you are in a care home) this will affect your Pension
  Credit. You will be counted as having an extra £1 a
  week income for every £500 (or part of £500) over
  £6,000. There is no upper capital limit for Pension

 Capital includes cash, bank and building society
  savings, National Savings accounts and certificates;
  stocks and shares, premium bonds, income bonds
  and property (other than your home). It is usually
  valued at its current market or surrender value less
  10% if there would be costs involved in selling and
  less any debt secured on the property. If you own
  capital jointly with other people you will normally all
  be assessed as having an equal share. Some capital
  is disregarded.
                   Example 1
Mr Legato has savings of £7,500, £1,500 above £6000.
He is not in a care home. He is considered to have
"deemed income" of £3 (£1 for each £500 above £6000).

                   Example 2
Ms Adage has savings of £7,501, £1,501 above £6000.
She is not in a care home. She is considered to have
"deemed income" of £4 because any savings that include
parts of £500 are rounded up to the nearest £500. So
£1,501 is considered to be just the same as if she had
£2000 savings when calculating deemed income.
                How to claim

You can claim in the following ways:

 call Free phone 0800 99 1234 (text 0800 169

 complete and send in the tear-off coupon in
  leaflet “PC 1L Pick it up its yours” available from
  post offices;

 print out or fill in the claim form on-line;

 at an advice centre.
 Backdating and advance claims
Pension Credit can be fully backdated for up
to 3 months if you have met the qualifying
conditions throughout the whole period.

If you are going to become eligible for PC in
the future - for instance because your 60th or
65th birthday is coming up or you are about to
have a drop in income - you can make a claim
up to 4 months in advance of this change.
    The assessed income period and
       change of circumstances
 If you are over the age of 65 you may be given an
  award that lasts for up to 5 years (From April 2009
  indefinitely if over 75). This is known as the
  Assessed Income Period (AIP). During this period
  annual adjustments will be made automatically for
  increases in your state and private pensions but you
  do not need to report changes such as increases in
  your savings or pension income. If your income
  goes down you will be able to ask for your benefit to
  be reassessed. You also need to report certain
  changes such as if you move home, marry, are
  widowed, your earnings change or you go into
      Remember this paragraph please!
                 In hospital
 You can continue to receive Pension Credit if
  you are in hospital but you will lose any severe
  disability addition you get after 28 days, when
  you’re Attendance Allowance or Disability Living
  Allowance stops. You may also lose any carers
  addition that you have.

How is PC paid?

 PC is normally paid weekly in advance unless
  the weekly amount of PC you are paid is less
  than £1, in which case payments will be made at
  intervals of anything up to 13 weeks in arrears. If
  the weekly amount is less than 10p no PC will
  be paid unless it can be paid with another
If you disagree with a PC decision

If you disagree with the decision you have one
calendar month from the date of the decision
to ask the decision maker to reconsider the
decision. You can do this by telephoning or in

If, after the decision maker has reconsidered
your case, you are still not satisfied you can
appeal in writing, using form GL24. You will
have one calendar month from the date of the
reconsidered decision.
 Interaction with Housing and Council Tax Benefit
 The Government has introduced changes to the Housing Benefit and Council Tax
  Benefit rules from October 2003 to mirror the rules on the treatment of income
  and capital in Pension Credit.

 If you are entitled to the Guarantee Credit or Guarantee and Savings Credit you
  will normally be entitled to full Housing Benefit and Council Tax Benefit.

 If you only get the Savings Credit, you will need to make a Housing benefit claim.

 Although Housing and Council Tax Benefit will take any Savings Credit paid in to
  account as income in your HB & CT calculations, you will be given the full Single
  (£20.40) or Couple (£27.03) allowance as an extra disregard in the HB or CT
  calculation, so should never be any worse off financially.

 The Pension Service will collect and pass on information to local authorities and
  in Savings Credit only cases, the local authority will be required to use The
  Pension Service’s assessment of your income and capital for HB & CT claims.

 This should greatly reduce the amount of information that you have to provide to
  the local authority with any future benefit claim.
 No additions for any children, Tax Credits have to
  be claimed.

 For Guarantee Credit there is no upper capital /
  savings limit if Guarantee Credit is paid.

 Capital / savings limits still apply for Housing &
  Council Tax benefit if Guarantee Credit is not paid.

 Capital over £6,000 now gives a tariff income of £1
  per £500 over the £6,000.

 Working over 16 or 24 hours will not stop a claim.
Over 65’s get an extra amount, equivalent to the maximum savings
credit, for singles (£20.40) or couples (£27.03) weekly included
within any Housing & Council Tax calculation. This applies even if
they do not claim any Pension Credit.

New Non-Dependent deductions or any decreases in Housing &
Council Tax Benefit do not apply until 26 weeks have passed.

Once Pension Credit is claimed this should automatically give full
Housing & Council Tax benefit, with no need to re-claim ever in

No Non-Dependent deduction applies if the Non-Dependent has
Pension Credit Guarantee or Savings Credit.

Savings Credit is to reward people with modest incomes who have
saved or worked hard for their retirement.
       Savings Credit Summary:
 They compare your income/s with the normal
  Retirement Pension for your circumstances (single
  £96.00 or couple’s £153.40). If you have qualifying
  income under this amount you get no Savings
  Credit, if you have qualifying income over this
  amount and under the Guarantee Credit for your
  circumstances (Single £130.00 Minimum or Couple’s
  £198.45 Minimum) you get rewarded with a 60% or
  60p per £1 top up on the difference up to maximum
  set limits.

 If you have over your Guarantee Credit amount they
  reduce your maximum Savings Credit top up by 40%
  or 40p for every £1 of the excess until you lose it all.
Questions and Answers?