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

Update: Check soon for February's cost of living payment. This blog is about pension credit, if you're entitled, apply at speed, as if you start an application by 5 March 2024, and are eligible you will also automatically get £299 as a backdated cost of living payment. Do it later and you won’t.

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 £900 extra to help with the cost of living.

So as we're amidst a cost of living crisis, it's crucial we spread the word as quickly as possible, as this payment is worth on average £3,900 a year, and it can have a real impact reducing the physical and mental health risks hitting many on lower incomes. 

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

Well I say call, actually try www.gov.uk/pension-credit 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 – far better for more to check and not get, than more to not check when they could get. 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.

- If your total income is under £204 per week (£307 for a couple both pensioners). You are very LIKELY to get pension credit as this is the level of the full state pension it is meant to top up. 

- If your income is £204 to £220 per week (£307 to £320 for a couple both pensioners). 
There’s A CHANCE you will get pension credit, it depends on circumstances, (there’s a higher threshold if you claim certain disability benefits or have caring responsibilities, so if this is you it’s worth checking). In fact in some circumstances you could get it even with higher income, but above these levels, it's much less likely I don't want to give false hope. 

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 £201.05 a week for single people or £306.85 a week for cohabiting or married couples of state pension age. The average top-up is £75 a week so that's £3,900 a year.

    The reason I say check if you've income under £204 (£307 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 72+), 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 £174.49 a week in income (£277.12 for a couple), then you get 60p extra paid per £1 of income up to a maximum of £17.84 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:

  •  Up to £900 payment to help towards the cost of living. Following on from the cost of living support payments made last year, this year those on certain benefits, including pension credit can get up to £900 (made in three installments of £301, £300 and £299). The first payment was made between 25 April and 17 May, with the second and third following on later this year.   

    If you're of state pension age (and fulfil the other eligibility criteria), but have not yet applied for pension credit, claim as soon as possible, to ensure you’re eligible for the second and third 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.