Pension credit blog

Martin Lewis: The one thing everyone aged over 66 needs to know

It is a national tragedy that getting on for a million pensioners, many of whom have been paying into the system for years, are missing out on a critical boost to their income. It's called pension credit, and this year it also means you get up to £650 extra to help with energy bills.

So as we're slap-bang in the middle of a cost of living crisis, it's crucial we spread the word as quickly as possible, as this payment is worth on average £3,300 a year, and it may stave off physical and mental health risks in what I suspect will be a dangerously expensive coming winter.

Pension credit 10-second need-to-knows (spread the word)

My rule of thumb for those of state pension age (currently 66 or older)... If you are single with total weekly income under about £200, OR if you're a couple, both of pension age, with weekly income under about £300, then DON’T STALL, JUST CALL…

Well I say call, actually try first if you can (I couldn't think of a rhyme for going online...). Though if you aren't comfortable online and prefer to speak to someone, then call the pension credit helpline on 0800 99 1234 (N. Ireland 0808 100 6165) to see if you're due. It's usually open from 8am to 6pm.

I'm NOT saying everyone will be entitled to pension credit; there's huge variance depending on if you've savings, disabilities, and other factors. Yet at this income it's definitely worth spending five minutes to check. You CAN get it if you're a homeowner, claim other benefits or live with grown-up family. The worst that can happen is they say no.

What counts as 'total income'? Income from work, pension, state pension, some benefits, and savings/investments over £10,000 (this is counted as £1 a week in income per £500 of savings above £10,000 – if only).

Now the nitty-gritty – what is pension credit?

You could just stop with the info above, but if you want to know more, read on. Pension credit's a naff name for what's simply an income 'top-up' payment. Technically it's a means-tested benefit to help those without enough to live off, with two parts:

  • Guarantee credit: This tops your income up to at least £182.60 a week for single people (rising to £201.05 in April 2023) or £278.70 a week for cohabiting or married couples (rising to £306.85 in April 2023) of state pension age. The average top-up is £65 a week so that's £3,300 a year.

    The reason I say check if you've income under £200 (£300 for couples) is first as you may get more if you've got extra 'responsibilities', such as a severe disability, you're a carer or look after an under 20-year-old, and second because of…
  • Savings credit: If you hit state pension age before April 2016 (so you're roughly aged 71+), you may be due a top-up if you have savings, even if you're not due guarantee credit – the aim was to stop those who'd put something aside for their future being disadvantaged.

    I'm going to explain how it works, but it is really complex, so if that scares you don't read the next paragraph, just call and check if you're due.

    Here goes... if some of your current income is from savings (it's counted as £1 a week income per £500 of savings above £10,000) and that takes you above £158 a week in income (£252 for a couple), then you get 60p extra paid per £1 of income up to a maximum of £14.50 a week. Simple, eh!

Pension credit has a superpower... it's a gateway entitlement triggering many other boons

If you're entitled to the guarantee credit element, this also entitles you to a host of other state protections. Here are just some of them:

  • URGENT: One-off £324 lump sum to help with energy bill rises (£326 paid in July deadline passed; £324 from 8 November). The Chancellor announced this cash in May. And while you can no longer qualify for the first payment, if you were of state pension age between 26 August and 25 September (and fulfil the other criteria), then provided you claim by 19 December 2022, you can backdate your claim and still get it, so that's a major boon.

    Plus, the Government announced in its Autumn Statement on 17 November that a similar payment of £900 will be paid out next year too – and while eligibility criteria haven't been confirmed yet, it's likely to be the same as last time. So it's worth claiming pension credit if you're eligible, so you don't miss out on the extra payments.

  • Free TV licence for over-75s – worth £159. Those over-75s on pension credit can claim a free one for their household.

  • Council tax reduction – potentially worth £1,000s a year. Depending on your local authority's rules, this may cover your entire council tax bill.

  • Help with heating and energy costs – worth £100s. Pension credit entitles you to the warm home discount, which is a £150 credit on your energy bill, normally given by the end of March. You could also get extra payments in weeks where there is very cold weather.

  • Housing benefit for renters – potentially worth £1,000s a year. It isn't a fixed amount, but you could get £100s a month, and even have your rent paid in full.

  • Free dental and optical care. You're entitled to free NHS dental care and vouchers for glasses or contact lenses.

For full information on pension credit, and how to apply, see the MSE pension credit guide.