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

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 an extra £650 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.

A 10-second summary (spread word)…

My simple rule of thumb is... if you are of state pension age (so currently 66 or older) and have total weekly income under roughly £200, then get online at www.gov.uk/pensioncredit or call the pension credit helpline on 0800 99 1234 (or 0808 100 6165 in Northern Ireland) to see if you're due.

I'm not saying everyone in this position is entitled to pension credit, but many are, so this is the point at which it's worth spending five minutes to check. The worst that can happen is they say no. So don't stall, just call (actually, try the website first if you're more comfortable with that, but I couldn't think of a rhyme for going online).

Q. Can I get it if I'm a homeowner / claim other benefits / live with grown-up family? Yes.

Q. 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 or £278.70 a week for cohabiting or married couples 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 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 £650 lump sum to help with energy bill rises (£325 paid in July, £325 autumn). The Chancellor announced this cash in May. And while you needed to be claiming some of the other qualifying benefits at the time to be due the first payment, for pension credit, provided you claim by 18 August 2022, you can backdate your claim and still get it (as long as you were state pension age in May), so that's a major boon.

  • 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 a full list of all the extra pension credits available, see the MSE pension credit guide.