Pension Credit

Pension Credit was introduced in the UK in 2003 by Gordon Brown, then Chancellor of the Exchequer, and was designed to lift a large number of the poorest retired people out of poverty. It replaced the Minimum Income Guarantee, which had been introduced in 1997. Pension Credit has two elements: Guarantee Credit is an income based benefit which is paid if the income of the applicant and partner (plus a notional income from savings) is below a certain level (£132.60pw for a single person and £202.40pw for a couple in 2010/11). The minimum age for claiming is rising in line with the increase in women's retirement age (see "Changes to the State Pension age"). It is currently just over 60, but by April 2020 the minimum age for claiming will be 65.

When the applicant or partner reaches 65 then the second element, Savings Credit, is also payable. Savings Credit is designed to "reward" people who saved for their pension during their working life. It therefore provides additional benefit to retired people who are not well off, but do have savings or a personal pension, and may not qualify for the full Guarantee Credit.

Anyone who is in receipt of the Guarantee Credit part of Pension Credit is also eligible for full Council Tax Benefit and Housing Benefit. This can be a significant amount, ensuring that a retired person in this position has their Council Tax and rent paid in full.

The amount of Pension Credit can be increased if the applicant and/or partner are in receipt of a disability benefit such as Disability Living Allowance (DLA) or Attendance Allowance (AA). This depends on whether the person in receipt of the benefit is (or is treated as) living alone. No one must be claiming Carers Allowance for looking after them. Claimants in receipt of the middle or higher rate care component of DLA or either rate of AA can qualify. The additional amount is called Extra Amount for Severe Disability (£53.65pw in 2010/11) and is added to the standard amount. The rules are complex and there are exceptions so anyone with any queries are encouraged to contact the Pension, Disability and Carers Service via Direct.gov.uk or an agency with expertise in benefits, such as Citizens Advice Bureau or Age UK.

All amounts shown above are weekly amounts.

Eligibility may be estimated on a government website.