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Pensions and retirement planning
Income, benefits and Pension Credit
Your income may affect how much Pension Credit you can get. Find out more about how your income may affect Pension Credit, how Pension Credit is paid and how it might affect your other benefits.
Income that is counted towards Pension Credit
The amount of Pension Credit you get depends on how much money you have coming in each week and how much you have saved or invested.
The following types of income are taken into account when calculating your Pension Credit:
- State Pension (including basic State Pension and additional State Pension)
- occupational and private pensions
- most social security benefits like Carer's Allowance
- £1 a week for every £500 (or part of £500) of 'capital' you have over £6,000 (capital includes savings and investments, and property that's not your main home)
- £1 a week for every £500 (or part of £500) of 'capital' you have over £10,000 if you live permanently in a care home
- earnings after tax and expenses from employment or self-employment, less half of any company or personal pension contribution you make
In this year’s budget the chancellor announced that the £6,000 capital disregard will be increased to £10,000 for all from 2 November 2009.
If you have a partner you and your partner’s income and capital will be added together when calculating your Pension Credit.
The term ‘partner’ refers to your husband, wife or civil partner, or the person you live with as if they were your husband, wife or civil partner.
If you are a self assesment tax payer
The amount of State Pension you get affects the amount of Pension Credit you can be paid. State Pension is taxable so you must tell The Pension Service about your actual or forecast Income Tax liability. Income Tax liability is the Income Tax you will pay or expect to pay. This helps ensure you are getting the correct amount of Pension Credit.
Find out more about Income Tax:
Income that is not counted towards Pension Credit
Income that is not counted towards Pension Credit includes:
- Attendance Allowance
- Christmas Bonus
- Disability Living Allowance
- Housing Benefit
- Council Tax Benefit
Further information is available on the following benefits:
You can still get Pension Credit if you are living with your family. The Pension Service look only at your income and not at theirs. Also you can still get pension Credit if you own your own home: the home you live in does not count towards your ‘capital’.
How Pension Credit is paid
Pension Credit is normally paid directly into your bank, building society, Post Office or National Savings account.
What to do if your circumstances change
If your circumstances change, for example your capital goes up or down, you should contact The Pension Service who will be able to look at your claim again to make sure you are getting the right amount of Pension Credit.
How to appeal about a Pension Credit decision
If you are refused Pension Credit or think it has been calculated wrongly, ask the office that dealt with your claim to reconsider the decision. If you are still unhappy with the outcome you can appeal to an independent Tribunal.
Find out more about the appeals process in the booklet 'If you think our decision is wrong'.
Effect of Pension Credit on other benefits
If you are getting Pension Credit you may be able to get additonal benefits/help such as:
- Housing Benefit
- Council Tax Benefit
- Cold Weather Payment
- Funeral Payments
- Community Care Grant
- Budgeting Loans
- Crisis Loans
- Winter Fuel Payments
- Sure Start Maternity Grant
- free school meals
The Pension Service can now help you apply for Pension Credit, Council Tax Benefit and Housing Benefit at the same time over the phone.
Help on Pension Credit
For more help call the Pension Credit helpline on 0800 99 1234 or textphone 0800 169 0133. Lines are open 8.00am to 8.00pm Monday to Friday and 9am to 1pm on Saturday.
