Martin Lewis provides clarification on pension credit payments
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Pension Credit is extra cash paid by the Department for Work and Pensions (DWP) for people over the state pension age and who are on a low income. The payment is separate from the state pension and people can get the financial support even if they have other income, savings or own their own home. It is thought that about 800,000 households are not claiming Pension Credit even though they are eligible and the DWP is urging people to check if they are able to claim the help as soon as they can.
This is because those who receive Pension Credit could also be eligible for the second half of the £650 cost of living payment.
The second instalment of £324 will start to be paid from November 8, and those claiming Pension Credit on or before September 25, will automatically be able to get the payment.
If a person makes a claim for pension credit now and it is found to be due, then it can be backdated by up to three months which will make a person eligible for the cost of living payment.
The DWP’s newsletter Touch base explained: “The last date for those who can successfully backdate their claim is December 19, though we urge people to get their applications in as soon as possible.”
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“People do not have to do anything extra to backdate their claim. If they make their application online, they will automatically be asked about backdating, and if they make their application over the phone the adviser will talk them through this.”
Pension credit consists of two parts called the “Guarantee Credit” and this is a low-income top-up.
The second part is the “Savings Credit” which is a bonus for low-income pensioners who have put aside money towards their pension income.
People are able to qualify for one without the other.
In the 2022-23 tax year, guarantee credit can top up a pensioner’s weekly income to £182.60 if they are single and by £278.70 if they are part of a couple.
In its calculations, the DWP will include state pension, other pensions, earnings from employment and self-employment, and other social security benefits as income.
However, it is not all other benefits are classed as income.
Payments from Adult Disability Payment, Attendance Allowance, Child or Housing Benefit, Disability Living Allowance (DLA), Personal Independence Payment (PIP), or social fund payments like Winter Fuel Payment are not included in the calculations.
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If a person’s income is higher than the threshold, they could still be eligible for pension credit if they have a disability, they care for someone, have savings, or has housing costs.
People can still receive Pension Credit even if they have some savings put away, if someone has less than £10,000 in savings and investments then it will not affect their Pension Credit.
For Savings Credit, the amount a person can receive depends on whether a person meets the “savings credit threshold”.
People must have a weekly income of at least £158.47 a week if they are single or £251.70 a week if people are claiming as a couple.
The most people can get from savings credit is £14.48 a week for those who are single or £16.20 for couples.
Even if someone is only entitled to a small amount of pension credit, then the Government still recommends people to claim.
This is because once claiming, a person could qualify for other benefits such as a free TV licence if they are over the age of 75, a council tax reduction, free dental treatment, and housing benefit.
People can also claim the Warm Home Discount which is £150 worth of support given to someone through their energy company, and the Cold Weather Payment which is a £25 benefit awarded to people during a continuous seven-day period of very cold weather between November and March.
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