Pension credit is a benefit provided by the Department for Work and Pensions (DWP) which tops up retiree incomes to make sure they have enough to live on.

Even if you are only eligible for a small amount, it is always worth claiming pension credit if you can, because it gives you access to a range of other benefits and discounts.

How is pension credit calculated?

To be eligible, you must reside in England, Scotland, or Wales and have reached State Pension age. The scheme is operated separately in Northern Ireland. You must also have a weekly income that falls below a certain level.

If you’re single, your weekly income will be topped up to £201.05. If you have a partner, your joint weekly income will be topped up to £306.85. Even if your income exceeds these amounts, you might still be eligible for pension credit if you have a disability, care for someone, have savings, or incur housing costs.

Your income could include the state pension, other pensions, wages, and most social security benefits such as carer’s allowance. However, many benefits are not counted as income, including child benefit, various disability benefits, and the winter fuel allowance. Check the full list on the Government website.

Can you apply for pension credit with savings?

In terms of savings and investments, if you have £10,000 or less, it will not affect your eligibility for Pension Credit. However, if your savings exceed £10,000, every £500 over the threshold will be considered as £1 income per week. For example, if you have savings of £11,000, an additional £2 income per week will be calculated.

This also includes investments, such as stocks and shares accounts, as well as any property you own that isn’t the house you live in.

If your circumstances change, leaving you with a lot more or less in savings than you had before, it is advisable to contact the Pension Service helpline. They can provide guidance and support based on your individual situation.

What is savings credit?

One part of pension credit comes in the form of the guaranteed weekly income mentioned above. This is known as guarantee credit.

But there is also a second part called savings credit which is only available for those who reached state pension age before 6 April 2016, and who have some form of retirement savings, for example in a workplace or personal pension.

The idea is to reward savers who put money into their retirement funds during their working life. It can therefore help people who may not qualify for a top-up, but who could do with a little extra money on top of what they’ve already put aside. You might still be eligible for savings credit, even if you do not get guarantee credit.

Single eligible people get up to £15.94 savings credit a week, while couples can get £17.84.

Should you apply for pensions credit even if you have savings?

If, after totalling up your income and savings, you think you could still be eligible for pension credit, then it is definitely worth applying. Even if you are only eligible for a very small top-up, it entitles you to other benefits that could be worth much more in total. For example, you automatically receive cold weather payments, and can get help with NHS costs such as dental treatment.

It’s especially important given that billions go unclaimed each year in the UK in tax breaks and benefits. According to the most recent figures, from the 2019-2020 tax year, around 770,000 pensioner households are entitled to, but not receiving, pension credit. That’s a third of eligible people missing out on extra payments. So, it is always worth checking if you or a loved one could be entitled to more than you’re getting.

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