Thousands of eligible households are still not applying, despite an 81% increase in Pension Credit claims
We describe who is eligible for Pension Credit as well as the application process.
Following the announcement by chancellor Rachel Reeves last year that the Winter Fuel Payment would be means-tested, the number of Pension Credit claims has increased by 81%.
Approximately 235,000 Pension Credit claims have been submitted since the announcement in July 2024, as opposed to 129,900 during the same 30-week period in 2023 and 2024.
Liz Kendall, Secretary of State for Work and Pensions, stated: "I'm thrilled that we've been able to connect with so many pensioners who require Pension Credit, which can be a lifeline for so many people with low incomes.
Pension Credit, which can be worth up to £4,300 annually (an average of £3,900 annually), grants access to additional benefits such as Winter Fuel Payment, a free TV license, and assistance with NHS expenses.
Ever since Rachel Reeves announced last summer that the Winter Fuel Payment, which was previously a universal benefit to all pensioners, would be means-tested, the number of applications for Pension Credit has increased.
Last year, pensioners were informed that their applications might take several months to process due to the backlog caused by the rush to file.
Today, the Department for Work and Pensions (DWP) declared that it has now processed "a record number of claims, reducing the number of applications yet to be cleared from its peak of 85,500 to just 33,700 by 23 February, which is in line with normal levels of Pension Credit claims waiting to be processed."
Due to this, a record 117,800 applications have been granted, which is a 64 percent increase from the same period last year when the chancellor announced the Winter Fuel Payment.
Pension Credit supplements a retiree's income and can be applied for even if you own your home or have a pension.
It is among the most underutilized and misinterpreted advantages. Approximately one-third of those who are eligible do not make a claim.
Many pensioner homeowners do not take advantage of the benefits to which they are entitled, including the reduction in council tax and Pension Credit, according to the retirement specialist Just Group.
Its analysis reveals that last year, home-owning retirees lost out on an average of 1,807 more dollars in income.
Everything you need to know about Pension Credit is covered, along with the different application processes.
Pension Credit: What is it?
Although the average annual Pension Credit is £3,900, some households may find it to be worth more. It also opens up access to additional benefits like the Winter Fuel Payment from the previous year, the 150 Warm Home Discount Scheme, assistance with NHS expenses, and cold weather payments.
Everyone in the UK who was of state pension age was previously eligible for the Winter Fuel Payment.
Using the government's online Pension Credit calculator, anyone can find out if they or a loved one are eligible for Pension Credit.
It is given to low-income individuals of state pension age, regardless of whether they have savings, a personal or workplace pension, or a home of their own. It is distinct from the state pension.
The two components of the benefit are savings credit and guarantee credit. The former is available to those with low incomes and tops up your pension income up to a certain amount. Only individuals who attained state pension age prior to April 6, 2016, and who had some retirement funds saved, such as in a personal or workplace pension, are eligible for the latter.
Age UK's charity director, Caroline Abrahams, says: "We strongly encourage anyone who is struggling to come forward and see if they qualify for additional assistance, as Claiming Pension Credit is the primary pensioner benefit that also qualifies people for a Winter Fuel Payment.
It's worthwhile to apply for Pension Credit even if you will only receive a small amount because it will entitle you to additional benefits.
A free TV licence if you are 75 years of age or older; assistance with NHS dental care, glasses, and transportation costs for hospital appointments; Warm Home Discount (only for those who receive the guarantee element of Pension Credit, or are on a low income and have high energy costs); Christmas bonus (only for those who receive the guarantee element of Pension Credit); assistance for mortgage interest (SMI) if you own the property you live in; housing benefit if you rent the property you live in; and a reduction in council tax if you live in a rental property.
When is the cutoff date to apply for Winter Fuel Payment and Pension Credit?
Since the energy price cap went up by 1 percent on January 1st and will go up by another 6 point 4 percent in April, many pensioners will be concerned about losing their Winter Fuel Payment.
Checking your eligibility for Pension Credit is worthwhile because, should you be accepted, you will be automatically credited with the Winter Fuel Payment in the future.
It won't be given to you for this winter, though. Last September 22nd was the cutoff date for Winter Fuel Payment and Pension Credit applications. As long as you applied by December 21st, the DWP may backdate your claim if you applied after this date.
Why have so many individuals previously neglected to submit a Pension Credit claim?
With its complicated qualifying requirements, the Pension Credit is one of the most underutilized government benefits. It's a common misconception among pensioners that you can't get it if you own your own house, but this isn't always the case. Pension Credit may also be available to them if they have savings or a pension.
According to the most recent government data, roughly two-thirds (65 percent) of those eligible for Pension Credit received the benefit in 2022 - 2023. This indicates that up to 760,000 eligible households are not making use of the assistance. A total of 1.5 billion dollars were left unclaimed.
It's possible that even those who do claim it aren't getting paid enough. Due to their failure to update their financial information with the DWP, some pensioners who receive Pension Credit may be losing out on additional funds. For instance, their eligibility for a larger amount of Pension Credit may increase if their savings decline.
According to data last year, DWP could be disbursing an additional 80 million if it had current data on claimants. According to Stephen Lowe, group communications director at Just Group, "For retirees with low incomes, as well as for those who are disabled, care for others, or have dependents, benefits like Pension Credit are a valuable financial resource."
It is therefore extremely upsetting to see that eligible pensioners lost out on 80 million dollars in additional income in 2023 - 2024 as a result of providing false information. Even though the application process can be drawn out, we strongly encourage people to persevere because the funds are there to help those who need them the most.
To encourage more individuals to claim the benefit, governments have launched a number of awareness campaigns. According to the DWP, it is looking into additional ways to "rally the poorest and most isolated pensioners who are eligible for support in order to increase claims." One such example would be "writing to all pensioners who appear to be entitled to Pension Credit and who make a new claim for Housing Benefit."
It also claims that the online claim form has been updated, making the average time to apply for Pension Credit only 16 minutes.
However, Abrahams at Age UK notes that only 65 percent of people claim Pension Credit, "and the figure has never gone above 66 percent in the last decade" despite multiple campaigns over the years to encourage people to take advantage of it.
She continues, saying: "If they file a claim, we would advise anyone who has an elderly family member to bring up the subject of bill costs and bring up this additional assistance that could help them manage."
What is the value of Pension Credit?
Because of the state pension triple lock, Pension Credit increased by 8.5 percent in April 2024. Pension Credit increases a pensioner's weekly income to 218.15 if they are unmarried, which is 11,344 annually for the current tax year. The combined weekly income of a couple with a partner is increased to 332 point 95 (17,313 annually).
This April, it will increase by an additional 4 points.
However, if you have other expenses and obligations, you might be eligible for additional funds. Those with severe disabilities can receive an additional 81.50 per week. To be eligible, one of the following benefits must be received.
Attendance Allowance The middle or highest rate from the care component of disability living allowance The daily living component of personal independence payment (PIP) Armed Forces Independence Payment Daily living component of Adult Disability Payment (ADP) at the standard or enhanced rate If you are responsible for the care of another adult, you may be eligible for an additional 4560 per week if you receive carers allowance (or you have claimed carers allowance but are not being paid because you receive another benefit that pays that amount). This additional sum can be shared between you and your spouse if you have both applied for or are currently receiving the carers allowance.
A further 66.29 per week could be awarded to those who are in charge of a child or young person (this amount rises to 76.79 per week for the first child if they were born prior to April 6, 2017). The child or young person must be 19 years of age or younger and typically live with you. You might receive an additional payment if the child or young person has a disability.
Housing costs are reduced by the last top-up. If your house is leasehold, you might have to pay more to cover service fees or ground rent. Each of the aforementioned payments is referred to as "guarantee credit" and is a component of pension credit.
Savings credit, which is the other component of pension credit, can be worth up to 17 points per week if you're single and up to 19 points per week if you have a partner.
For whom is the Pension Credit available?
To be eligible for Pension Credit, you must be a resident of England, Scotland, or Wales and be at least 66 years old, which is the state pension age. Your income is determined when you apply for guarantee credit; if you have a spouse, your joint income will also be determined.
Income is defined by the DWP as your earnings from employment or self-employment, your state pension and other pensions (even if they have been deferred), and the majority of benefits.
Not all benefits, though, are included in the income calculation. The following are not included: personal independence payment, housing benefit, child benefit, disability living allowance, attendance allowance, council tax reduction, and Christmas bonus.
In addition, your investments and savingsincluding stocks and any real estate you own outside of your residenceare considered. Your eligibility for Pension Credit won't be impacted if you have £10,000 or less.
Every five hundred over 10,000 will be considered one weekly income if you have more than 10,000. Thus, having £11,000 in shares and savings is equivalent to having two sources of income each week. Guarantee Credit will top you up to the amount if your weekly income is less than 218.15. It will be topped up to 332.95 if you are filing as a couple and your weekly income is less than that amount.
There are differences in the requirements for claiming savings credit. It is only available to those who reached state pension age prior to April 6, 2016, have some savings, and/or have a private pension. There is no cap on your savings, but your amount will be impacted if you have more than £10,000 saved. If you do not receive the guarantee credit portion of Pension Credit, you may still receive some savings credit.
A lot of pensioners probably don't bother claiming because of the complex eligibility requirements.
By using the government's Pension Credit calculator, you can determine whether you qualify and how much you will receive. You must have information about your income, pensions, investments, savings, and benefits. Call the helpline at 0800 99 1234 (Monday through Friday, 8 a.m. to 6 p.m.) if you run into trouble.
How do I apply for Pension Credit?
Pension Credit can be applied for in a number of ways.
There are three ways to apply: via the government website, by phone at the helpline (0800 99 1234), or by mail. You have up to four months before this date to apply if you haven't attained state pension age yet.
When you apply, you will need your National Insurance number in addition to details about your earnings, investments, and savings. You'll need the same information about your partner as well.
Most people apply for Pension Credit online or over the phone, according to government statistics.
Sarah Pennells, Royal London's consumer finance specialist, says: "You can start receiving payments sooner if you file for Pension Credit as soon as possible, and you can backdate your claim by up to three months. Furthermore, receiving additional assistance with expenses like rent and council tax if you qualify for Pension Credit could significantly impact your spending.
If your claim is denied when you apply for Pension Credit, you can request that the Pension Service review it again if you believe the decision was incorrect. The term "mandatory reconsideration" refers to asking them to revise their choice. It's free, and you don't have to hire a lawyer.
Having too much money, not being a UK resident, not providing all the information asked for, not filing on time, and not being of the appropriate age are some of the reasons a claim may be denied.
Learn More about the Work and Pensions Department.
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