Is it worth putting in a claim for pension credit? What are the benefits and how do I go about checking if I qualify?

Malcolm

Tom Selby, AJ Bell Head of Retirement Policy, says:

Pension credit is a key benefit provided by the state which often goes unclaimed by lower income retirees. The government has previously estimated over 850,000 eligible retirees fail to claim pension credit each year, with the average pension credit payment worth around £3,300 a year, according to the Department for Work and Pensions.

In 2023/24, if you are over state pension age (66), single and your income is less than £201.05 a week then you will qualify for pension credit, with the payment topping up your income to that level. For a couple, both of whom have to be over the state pension age, the combined income figure is £306.85.

In relation to pension credit, your income includes your state pension, other savings and investments, employment or self-employment earnings and most social security benefits. If you have £10,000 or less in savings and investments, it’s important to note this will not affect your pension credit claim.

If you have more than £10,000, every £500 over £10,000 counts as £1 income a week. For example, if you have £11,000 in savings, this counts as £2 income a week.

For those who are entitled to receive it, claiming pension credit is also important because it acts as a gateway to other benefits, such as help with heating costs, housing benefit and dental treatment. Those who claim pension credit currently qualify for cost-of-living payments from the government. These payments are designed to help people through the current period of high inflation and are targeted at low-income households. To be eligible for the latest cost-of-living payment, which is worth £301, you need to have been entitled to pension credit between 26 January and 25 February 2023.

DWP’s rules allow you to backdate pension credit claims by up to three months, meaning the deadline to make a claim for between 26 January and 25 February is approaching. Anyone wanting to apply for pension credit for this crucial period needs to have done so by 19 May.

Even if you only qualify for one day of pension credit between 26 January and 25 February, this will be enough to qualify you for the full £301 cost of living payment. If your application for pension credit for the period is successful, you will be paid the cost-of-living payment automatically – but it’s up to you to make a claim if you think you are eligible.

You can find the details for applying here. If you are unsure how to go about completing your application, organisations like Age UK and Citizens Advice can help.

DO YOU HAVE A QUESTION ON RETIREMENT ISSUES?

Send an email to asktom@sharesmagazine.co.uk with the words ‘Retirement question’ in the subject line. We’ll do our best to respond in a future edition of Shares.

Please note, we only provide information and we do not provide financial advice. If you’re unsure please consult a suitably qualified financial adviser. We cannot comment on individual investment portfolios.

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