What is pension savings credit?
Anyone on a low retirement income may be eligible for pension credit. There are two forms: guarantee credit and savings credit. Here we look at savings credit, who is eligible and how to claim it.
Pension savings credit is a government benefit that tops up your retirement income even if you took steps to save for retirement. It amounts to up to £14.04 a week for single people or £15.71 for couples and can be a welcome boost to your state pension.
This pension credit is generally only available to people who reached state pension age before April 2016. The exception to the rule is if you are in a couple and you or your partner is old enough to have qualified for their state pension before 6 April 2016.
Up to £10,000 in savings isn’t counted, but every £500 you have over that amount counts as £1 a week of income. The pension savings credit threshold is £153.70 a week if you are single and £244.12 if you are in a couple.
For every £1 of income you receive each week above that threshold your savings credit is reduced by 40p.
Am I eligible for pension savings credit?
You will need to meet some eligibility criteria before you can qualify for savings credit. First and foremost, you, or your partner, must have reached state pension age before 6 April 2016.
On top of this you also need:
- A minimum income of £153.70 a week if you are single or £244.12 if you are in a couple.
- To live in the UK.
- To have taken some steps to save for your own retirement. This could be through savings or a pension.
If you are in a couple and one of you reached state pension age before April 2016 you may be eligible for savings pension credit as a couple.
Anyone who doesn’t qualify for pension savings credit may find they can receive guaranteed pension credit instead. This can amount to up to £3,000 extra a year on top of your state pension.
How much savings credit will I receive?
The amount of savings credit you will receive depends on how much income you get from other sources. To work it out you need to add up your total income.
For example, add together your state pension income, private pension income and your savings income to get your total weekly income.
To work out your savings income under the government rules, every £500 you have above a £10,000 threshold equates to £1 of weekly income. Let’s say you have £15,000 in savings that would add a £10 weekly income. You take your £15,000 and deduct £10,000. You then divide the remaining £5,000 by £500 to get to £10.
The maximum savings pension credit is £14.04 a week for singles and £15.71 for couples.
For every £1 you receive over the pension credit thresholds of £153.70 a week for single people and £244.12 for couples your credit would be reduced by 40p.
How can I claim pension savings credit?
You can apply online for pension savings credit at Gov.uk or you can call the Pension Credit Claim Line on 0800 99 1234 (textphone 0800 169 0133).
Alternatively, you can download and fill in the pension credit claim form.
You’ll need the following information to hand when making a claim for pension savings credit:
- bank details for where you want the money paid
- your national insurance number
- details of your income, savings, investments and pensions
- what you spend on housing costs including mortgage repayments, mortgage interest payments and service charges
- your partner’s details if you are married, in a civil partnership or live together.
» MORE: Am I eligible for pension credit
What else can I claim?
If you qualify for pension credit it means you may be eligible for other benefits. These include a free TV licence, council tax reductions, housing benefit and free dental treatment.
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Ruth is a freelance journalist with 15 years of experience writing for national newspapers, magazines and websites. Specialising in savings, investments, pensions and property. Read more