What is Pension Credit?
Pension Credit is a state benefit designed to help people who are over the State Pension age and on lower incomes. If this is you, or someone you know, it may be worth finding out more about Pension Credit.
If you’re nearing State Pension age and ready to start claiming your State Pension, you should check if the National Insurance contributions you’ve made are likely to qualify you for the full State Pension. If they don’t, this is where Pension Credit, the safety net 1.4 million claimants rely on Footnote [1], could step in. Your financial wellbeing might count on it.
Providing you have at least ten years’ National Insurance contributions, you’ll receive a State Pension when you reach State Pension age. However, the amount of State Pension you receive will be in proportion to the number of years that you’ve paid contributions.
This means that some people will find themselves nearing State Pension age without enough National Insurance contributions to qualify for the full State Pension. If you’re in this position, Pension Credit could help.
If you’ve already retired and have passed State Pension Age, you can still apply for Pension Credit, although the money can only be backdated by three months.
A 'means-tested' benefit
Compared with the State Pension, Pension Credit is a relatively ‘new kid on the block’ in the world of state benefits. It was introduced in 2003 to replace what was known as the ‘Minimum Income Guarantee’. The key difference is that Pension Credit is a ‘means-tested’ benefit, funded from general taxation and a crucial safety net that could help to prevent older people stumbling into financial difficulties. Primarily, it’s designed for people over State Pension age on lower incomes. So, let’s look at when you might qualify and how the benefit works…
Three steps to Pension Credit
Your first step is to establish what your State Pension Age actually is, as things have changed in recent years. For example, the State Pension Age has changed to age 65 for women who retired between 2010 and 2018. For men and women born after 6 April 1978, it will be age 68. You can use this calculator to check your State Pension Age.
When you’ve done this, check your National Insurance record to see how much you’ve paid. If you’re falling short by a wide margin, this is where Pension Credit could step in to help.
You can apply for Pension Credit up to four months before you reach State Pension Age. If you’ve passed State Pension Age, you can still apply for it, although the money can only be backdated by three months. As previously mentioned, this is a means-tested benefit, so you’ll also need to supply information about any savings you have.
| 1 | Confirm your State Pension | What would you like to calculate? - Check your State Pension age - GOV.UK (www.gov.uk) |
| 2 | Check your National Insurance contributions | Check your National Insurance record - GOV.UK (www.gov.uk) |
| 3 | Apply for Pension Credit | Information you will need to apply online - Apply for Pension Credit (apply-for-pension-credit.service.gov.uk) |
Will I be eligible for Pension Credit?
Unlike contributory benefits, which are assessed individually, means-tested benefits like Pension Credit will take your partner’s income and savings into account as well. But don’t let that put you off as you could still get Pension Credit even if you have other income, savings or own your own home. It’s worth taking a few minutes to see if you are eligible.
And, importantly, once you’ve claimed Pension Credit, other benefits come into play. You could get help with housing costs, such as Council Tax, as well as Housing Benefit if you’re a tenant, and a ssistance with NHS dental treatment and other health-related costs.
How much could I get?
Currently Footnote [2], Pension Credit tops up your weekly income to £218.15, if you’re single, and your joint weekly income to £332.95 if you have a partner Footnote [3]. So, as a rough rule of thumb, if your income is likely to be less than this amount, it may be worth applying – especially since there’s a list of things that don’t count towards your income for these purposes, including certain disability payments. Remember that benefits rates change every year, as can your finances. You can find more details on eligibility on the gov.uk website.
Like all benefits, the exact amount you can get changes and will depend on your personal financial circumstances. Whatever your situation is, having some knowledge about Pension Credit can be useful. You never know when you might need it.
How to apply
If you’re ready to take the next step, it’s easy to get started. You just need to visit the government’s gov.uk site where you can apply online.