Pension Credit

What is Pension Credit?

Pension Credit is a tax-free benefit which you may be able to claim once you reach State Pension age. It’s means tested, which means you’re only able to get it if you have an income that’s below a certain level.

Pension Credit eligibility 

You may be eligible for Pension Credit if you’re State Pension age or older. This is the age that you’re able to claim the State Pension, not the age you retire at (the State Pension age is currently 66). There are two parts to Pension Credit: Guarantee Pension Credit and Savings Pension Credit. You may be able to claim one or both types.

The Pension Credit you may be able to claim depends on when you reached State Pension age. If you reached State Pension age on or after April 6th 2016, you may be able to claim Guarantee Pension Credit.  If you reached State Pension age before April 6th 2016, you may be able to claim Guarantee Pension Credit and/or Savings Credit.

Guarantee Pension Credit

Guarantee Pension Credit (also called Guarantee Credit) tops up your income to a minimum level. In tax year 2024/25, the minimum income level is £218.15  a week if you're single or £332.95  a week if you have a partner. However, you may still qualify for this part of Pension Credit if your weekly income is higher and, for example, you have a disability.  
 
If you care for someone, you may be entitled to £45.60  a week as an extra amount. It’s called the Carer Addition. If you have a disability, there’s the Severe Disability Addition that you may be entitled to, which is worth £81.50  a week. If you’re responsible for a child or young person under the age of 20, you could get an extra £66.29 a week. All these figures are for tax year 2024/25.

Savings Pension Credit

You can only claim Savings Pension Credit (also called Savings Credit) if you reached State Pension age before April 6th 2016. But if you fall into that category and you haven’t claimed it already, it’s not too late to do this.  If you qualify, you may be able to get Savings Pension Credit if you have savings or a pension and your income is up to £260.67 a week if you are single or £380.54 a week if you have a partner. If you’re eligible, you could get up to £17.01 extra a week if you're single and £19.04  extra a week if you're a couple. All these figures are for tax year 2024/25.

How much is Pension Credit per week?

The way Pension Credit is worked out means that it’s impossible to give a simple figure of how much it’s worth a week. However, the Department for Work and Pensions says that Pension Credit is worth an average of £3,900 a year. This works out at £75 a week – but you may get more or less.  
 
The amount of Pension Credit you get will depend on a range of factors, including: 

• How much you currently have in income 
• How much you have in savings and/or investments  
• Whether you have any disabilities or caring responsibilities 
• Whether you reached State Pension age before April 6th 2016. 

Why Pension Credit is so valuable

Pension Credit is a valuable benefit because it is a ‘gateway’ benefit. That means, if you’re able to claim it, you may also be able to get help with housing costs (through Council Tax discount and Housing Benefit or Support for Mortgage Interest). You’re also eligible for a free TV licence if you’re aged 75 or over and you may be able to get help with NHS dental treatment, prescriptions and transport costs.

If you’re entitled to these benefits, the state help you get could be very valuable and that could make a real difference to your finances. However, approximately a third of people who could claim Pension Credit, 800,000 people in all, are missing out because they haven’t applied for it. 
 
Under plans announced by the government, the Winter Fuel Payment will be restricted to people on Pension Credit from winter 2024/25. The Winter Fuel Payment is a payment to help people over State Pension age with the cost of energy bills and is worth between £100 and £300 (if you live in England or Wales). You can find more information about the Winter Fuel Payment on the Gov.uk website.

How Pension Credit means-testing works

If you’re applying for Pension Credit, then both your income and your savings (above a certain level) will be taken into account. However, not everything counts as income. The income that will be taken into account if you apply for Pension Credit includes:

• State Pension 
• other pensions (such as workplace or personal pensions) 
• money you earn from working for yourself or being employed  
• most social security benefits (but not all).

Not all state benefits are counted as income. For example, the following are not counted: 

• Adult Disability Payment 
• Attendance Allowance 
• Christmas Bonus 
• Child Benefit 
• Disability Living Allowance 
• Personal Independence Payment 
• social fund payments like Winter Fuel Allowance 
• Housing Benefit 
• Council Tax Reduction 

Pension Credit and your savings and investments 

If you have £10,000 or less in savings and investments this will not affect your application for Pension Credit. If you have more than £10,000 in savings, then for every £500 you have over £10,000, you’re treated as getting £1 week in income. This is called ‘deemed income’.

For example, if you have £11,000 in savings, you are treated as getting £2 a week in income (2 x £500). This will be added to any other income you receive when working out how much Pension Credit you may be entitled to.

Pension Credit and your pension

If you have a workplace or private pension, then it may affect how much Pension Credit you could get, even if you haven’t taken any money from it. How you may be affected depends on how you’ve taken money out of your pension.

• If you don’t take any money out of your pension pot. The pension pot itself won’t be counted as ‘capital’ in the way that savings or investments are (see above). However, you will be assumed to have taken income equivalent to the amount that an income for life (called ‘an annuity’) would pay you. This is called ‘notional income’ – namely, income that you’re treated as receiving, even though you’re not actually being paid it.  
• If you take income through drawdown. If you draw down regular amounts from your pension, then the amount you receive will be taken into account alongside any other income you have.  
• Lump sum withdrawals. If you take lump sums from your pension from time to time, these will be taken into account in the same way that savings and investments are (as capital). This means that if your total savings and/or investments are above the £10,000 threshold, you’re treated as having £1 a week in income for every £500 above this level.   
• Taking your whole pension pot at once. If you take all the money out of your pension, it will be taken into account in the same way that savings and investments are (as capital). This means that if your total savings and/or investments are above the £10,000 threshold, you’re treated as having £1 a week in income for every £500 above this level.   
• If you buy an annuity. If you buy a guaranteed income through an annuity, the income you get from the annuity will be taken into account alongside any other income you have. 

Watch out: If you take money out of your pension and spend it or give it away, you could be treated as still having the money under what’s called the ‘deprivation of capital’ rules. These rules are designed to stop people from giving away money or investments in order to qualify for means-tested benefits.

Pension Credit and the State Pension

If you’ve put off claiming your State Pension (called delaying or deferring), then the amount of State Pension you would have got, had you claimed it when you reached State Pension age, will count as income alongside any other income you have.  

Applying for Pension Credit 

You can apply for Pension Credit online or over the telephone. It’s worth knowing that when you apply for Pension Credit, you can backdate your claim by up to three months. You have to live in the UK to get Pension Credit.

• You can only apply for Pension Credit if you’ve reached State Pension age (which is currently 66, but is due to rise to 67 between 2026 and 2028).  
• If you have a partner, you both must have reached State Pension age in order to apply for Pension Credit. If you reached State Pension age before April 6th 2016 and want to apply for Savings Credit, your partner (if you have one) must have reached State Pension age before that date as well. However, if you started receiving Savings Credit before April 6th 2016, and have received it continuously since, you are entitled to continue to receive it.  

You can apply for Pension Credit online at the Gov.uk website if you live in England, Wales or Scotland. If you live in Northern Ireland, you can apply at the NI Direct website. You can also apply by ringing the Pension Service on 0800 99 1234  if you live in England, Wales or Scotland and 0808 100 6165 if you live in Northern Ireland. 

If you want to find out if you’re entitled to Pension Credit or any other benefits, then there’s a free to use and confidential benefits calculator on the website of our national charity partner, Turn2us.