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‘I’m an older person: what am I entitled to?’
> ‘Please tell me about Pension Credit’




Pension Credit is a confusing benefit.

So the more income you have the lower your Guarantee Credit and the higher your Guarantee Credit. If this doesn’t confuse you you need to read it again.

It’s perhaps worth mentioning that Guarantee Credit isn’t guaranteed, and Savings Credit has nothing to do with savings.

In fact it’s not quite as bizarre as it sounds. This is because the main benefit is the Guarantee Credit: quite a lot of people don’t get any Savings Credit at all, and even those who do will normally only get quite a small amount of Savings Credit. You cannot get more than £13.20 per week Savings Credit if you are single, or £14.90 if you are a couple.

You claim them both the same way, though, by contacting part of the DWP called the Pensions Service. You can contact them by phone on 0800 99 1234 (a freephone number). You don’t have to say which of the two you need to claim: just tell them you want to claim Pension Credit and let them work it out. However it is still a good idea to understand for yourself how it works.

Let’s put Savings Credit on one side for the moment and look first at Guarantee Credit.

Guarantee Credit

Until Pension Credit was invented, older people who did not have enough to live on were able to claim Income Support. The Guarantee Credit part of Pension Credit is, therefore, a direct replacement for this Income Support, and if you know how Income Support works you’ll already know most of what you need to know to understand Guarantee Credit.

To be entitled to Guarantee Credit you need to fit the rules below:

icon-key1.jpgUnlike benefits like Income Support, Employment and Support Allowance, and Jobseeker's Allowance, there is no restriction on working. The government are quite happy for you to work, although any income you receive may affect how much Guarantee Credit you actually get.

How much will you get?

We first need to work out something called your maximum guarantee credit:

If you are single, and have no other income, you will be entitled to £159.35 per week. You may also be entitled to:

If you are part of a couple, and you have no other income, you will be entitled to £243.25 per week. You may also be entitled to:

The stuff about extra amounts due to disability is a bit confusing, so here is an example.

icon-example1.jpgBill and Iris are a couple: no one else lives with them. Bill gets Attendance Allowance but Iris does not get that, or any of the other benefits listed. She is not blind.

They are therefore not entitled to either the extra £62.45 or the extra £124.90. As it happens no-one is getting Carer’s Allowance for Bill, but as they’re not entitled to anything extra anyway it wouldn’t have made any difference if they had.

Then Iris gets awarded Attendance Allowance as well. Still no-one gets Carer’s Allowance for looking after either of them. They are therefore entitled to an extra £124.90 per week.

Then their daughter, Sarah, gets Carer’s Allowance for looking after Bill. They can therefore no longer get an extra £124.90 per week as someone is getting Carer’s Allowance for one of them. But they can get an extra £62.45 per week.

Then their son, Tony, gets Carer’s Allowance for looking after Iris. As both of them now have someone claiming Carer’s Allowance for looking after them, they cannot now get the extra £62.45 either.

At the moment, therefore, they are just entitled to the standard couple amount of £243.25, compared with the amount they were getting before anyone claimed Carer’s Allowance for either of them: £368.15.

This all leads to an obvious warning:

icon-warning1.jpg If you are thinking about claiming Carer’s Allowance for looking after someone, think again, and talk about it with them first, if this is possible, as by getting this you may end up reducing their Pension Credit.


What if you have other money coming in, or savings?

This is fairly simple: your Guarantee Credit is reduced by the amount of any income you have coming in.

There are some complications, though:

Let’s see how this works out in practice

icon-warning1.jpgBack to Bill and Iris. The last time we checked they were both getting Attendance Allowance, and because people were getting Carer’s Allowance for looking after both of them they were not entitled to any extra amounts because of disability.

In fact, even though Iris is disabled she keeps herself active by working part-time at the corner shop.

I can now tell you that they have the following income (as well as their Attendance Allowance awards):
  • Bill gets a state pension of £90 per week - none of this can be ignored;
  • Iris gets a state pension of £54 per week - none of this can be ignored;
  • Iris earns £30 per week - £20 can be ignored as they (both) get Attendance Allowance, so this is treated as £10.
  • Between them they have £10,600 savings. There is one lot of £500 above £10,000 and one bit of £500, so this is treated as £2 of income each week.
If we add these together we get £156 (90+54+10+2)

Remember that without any income their Guarantee Credit would be £243.25. With this income they will get £87.25 Guarantee Credit.


Savings Credit


Savings Credit is really weird. You might even say it’s more trouble than it’s worth.

It was invented in 2002 because people were complaining that if you had been careful during your life and saved money this reduced the amount of means-tested benefit you were entitled to when you retired. The government of the time wanted to find a way to reward people for being careful. Whether it achieves this or not is a good question.

Oh, and just to add to the confusion, you cannot get it until you are 65, which might be quite a lot later than when you can claim the Guarantee Credit.

The way it works, put simply, is this: if you have money coming apart from the Pension Credit itself you get a small amount of extra money to reward you for this.

The detail of how the calculation works is quite complicated but here’s a brief summary of some of the key details:

If you’re eager for more detail, click here.

If, like me, you struggle to visualise from all this how Savings Credit works out in practice, I've provided an example here…

icon-example1.jpgSafraz is old enough to get Pension Credit, and lives alone. He has no disabilities and is not a carer.

His maximum Guarantee Credit is therefore £159.35.

The table below show how his Guarantee Credit, his Savings Credit, and his total overall income change as his income from other sources goes up. To make things simpler I have decided that all his income is qualifying income. This means that although I have not said what it it, we know that it might include a state pension and/or an occupational pension, for example, but not Severe Disablement Allowance, for example.

You can see from this that until Safraz’s qualifying income reaches £140 per week he doesn’t get any Guarantee Credit: it then goes up to a maximum of around £13 when his qualifying income is about £160, then it tails of to zero at about £190 per week.

Make of this what you will…
Other Income
(£/week)
Guarantee Credit
(£/week)
Savings Credit
(£/week)
Total Pension Credit
(£/week)
Total Income
(£/week)
0
159.35
0
159.35
159.35
10
149.35 0
149.35
159.35
20
139.35 0
139.35
159.35
30
129.35
0
129.35
159.35
40
119.35 0
119.35
159.35
50
109.35
0
109.35
159.35
60
99.35
0
99.35
159.35
70
89.35
0
89.35
159.35
80
79.35
0
79.35
159.35
90
69.35
0
69.35
159.35
100
59.35
0
59.35
159.35
110
49.35
0
49.35
159.35
120
39.35
0
39.35
159.35
130
29.35
0
29.35
159.35
140
19.35
1.59
20.94
160.94
150
9.35
7.59
16.94
166.94
160
0
12.94
12.94
172.94
170
0
8.94
8.94
178.94
180
0
4.94
4.94
184.94
190
0
0.94
0.94
190.94
200
0
0
0
200.00
210
0
0
0
210.00

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