There are two forms of pension credit: guarantee credit and savings credit. The guarantee credit is a government benefit designed to make sure that once you receive your state pension your overall income meets a minimum threshold.
Under the guarantee credit you will get a weekly income of at least £201.05, or £306.85 for couples in the 2023/24 tax year.
The pension savings credit element is only available to people who reached state pension age before 6 April 2016.
Am I eligible for guaranteed pension credit?
You may be able to claim guarantee credit if you live in the UK, have reached state pension age and have a weekly income below a certain limit. The income used to assess eligibility is your weekly income from all sources – that’s your state pension, personal pension and workplace pension. This also includes any pensions which you are entitled to but are not yet claiming.
Savings and investments are also factored into your income calculation for pension credit claims. Every £500 in savings or investments that you have above £10,000 will count as £1 a week for total income calculation. To be eligible all of this needs to amount to less than £201.05 if you are single, or £306.85 if you are married, in a civil partnership or live with your partner.
Couples cannot claim the guarantee credit until they have both reached state pension age. The only exception to this is if one of you is at or above state pension age and that person is claiming housing benefit for you as a couple. This only affects new claims for pension credit – if you were claiming pension credit before the change was enforced in May 2019 you won’t be affected.
It is also possible to claim guarantee credit if your income already exceeds these levels but:
- You have a severe disability.
- You are a carer.
- You have to pay housing costs.
How can I claim guarantee credit?
If you are likely to be retiring on a low income, it’s important to check whether you will be eligible for guarantee credit. You can apply when you are within four months of reaching state pension age.
Unsure when you will hit state pension age? It is in the process of gradually rising from 66 to 68, so what age you need to be to qualify for the state pension will depend on your date of birth. You can use the government’s calculator to find out your personal state pension age.
You can apply online for the guaranteed pension credit if you already receive the state pension and no children or young people are included in your claim.
Alternatively, you can call the Pension Credit Claim Line on 0800 99 1234 (textphone: 0800 169 0133) to apply. Make sure you have all the necessary information to hand before you call. This includes:
- your bank details.
- your national insurance number.
- details of your income, savings and investments and pensions.
- figures for your housing costs if you have any. This includes mortgage repayments, mortgage interest payments and service charges.
- your partner’s details if you are married, in a civil partnership or live together.
What can I do if I am rejected for guarantee credit?
If your application for guarantee credit is rejected, you can appeal. The first step is to ask the Pension Service to take another look at your claim. This is called asking for a ‘mandatory reconsideration’. You need to do this within one month of being rejected. When you make your appeal also ask why you were rejected the first time, as often this isn’t clear.
Try to gather evidence to show why the initial decision is wrong. This could be bank or pension statements that can confirm your income.
The best way to apply for a mandatory reconsideration is by letter as you can include your evidence and get proof of posting to show exactly when you sent your letter. The address to send it to will be on your decision letter.
Include in your letter an explanation of why you think you should be granted guaranteed pension credit and give evidence to support this. Make sure all your contact details are included.
If the one-month deadline is approaching, then you can call the Pension Service on 0800 731 0469 to request a mandatory reconsideration. Keep a record of when the call took place, who you spoke to and what was discussed.
If your appeal is successful, you will receive a backdated payment to the date of its initial decision.
If your appeal fails you and you are still unhappy with the outcome, you can take your appeal to an independent tribunal. Again, you need to do this within one month of your appeal.
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Dive even deeper
A qualifying recognised overseas pension scheme – or QROPS – is a pension scheme based in another country that might prove a suitable destination if you wanted to transfer your UK pension scheme abroad. You should definitely consider getting advice before making a QROPS transfer.
You might have a guaranteed minimum pension if you were a member of a contracted out final salary scheme before April 1997. A GMP pension should pay a level of income that is at least comparable with how much you would have received if you had been contracted into SERPS.