OLDER people need no longer struggle to survive on their State Pension alone. Benefits for senior citizens have increased over the past 10 years and if you are now on a low income and don’t have much money in the bank, then you may well be entitled to extra cash via an array of benefits. One of them is Pension Credit and here we explain the rules and regulations surrounding this state benefit…

What Is It?

PENSION Credit is a state benefit that makes sure people over 60 have a guaranteed income level. There are two parts to it – Guarantee Credit and Savings Credit.

Eligibility: To qualify, several conditions must be met: to get Guarantee Credit you need to be over 60, while for Savings Credit you need to be over 65. For Guarantee Credit, your income must not be above the “Standard Minimum Guarantee” and for Savings Credit there is a cap to how much benefit you can get. This is £20.52 per week for single people and £27.09 per week for couples. The other condition is that you must not be subject to immigration control.

With effect from 6 April 2010 the Government issued new English Guidance. This states that the qualifying age for those social security benefits where provision is aligned with the age at which women become eligible for state pension, is to increase from 60 to 65 between 6 April 2010 and 5 April 2020. This is inline with the increase in the state pension age for women. These changes affect Pension Credit and a number of other benefits.

The basic rate of Pension Credit for the Standard Minimum Guarantee for 2011/2012 is:

Single people: £137.35 per week

Couples: £209.70 per week

Additional amount for severe disability:

Single people: £55.30 per week

Couple where one person qualifies: £55.30 per week

Couple where both qualify: £110.60 per week

Additional amount if you are a carer: £31.00 per week

Savings Credit rates:

Threshold for single people: £103.15 per week

Threshold for couples: £164.55 per week

Maximum for single people: £20.52 per week

Maximum for couples: £27.09 per week

Income Support and Jobseeker’s Allowance (JSA)

PEOPLE under 60 who don’t have to actively seek work can receive Income Support. This group often includes disabled people. People of pensionable age who are unemployed but seeking work can claim Jobseeker’s Allowance (JSA). If you are in receipt of one of these state benefits and are nearing 60, you should get a letter four months before your 60th birthday. This will say you’ll need to claim Pension Credit instead. Men can stay on Jobseeker’s Allowance until they’re 65, or choose to claim Pension Credit. If you are entitled to Pension Credit, you may also get Council Tax Benefit and, if you are paying rent, Housing Benefit.

Additional Amounts

Severe Disability: If you have a partner and you get Attendance Allowance, you will not usually receive this additional payment as you’ll not be living alone. But you can still get the payment if your partner also gets Attendance Allowance, he/she is registered blind, you live on your own, or nobody receives Carer’s Allowance for looking after you.

Living Alone: You still count as living alone if you live with someone who is in receipt of Attendance Allowance, or the middle or higher care Disability Living Allowance component, or someone who’s registered blind.

Carers: In some situations a carer could get an extra £30.05 a week through the carer’s addition, but the person they are caring for would lose the severe disability addition, which is £55.30 per week. If you’re unsure whether to submit a claim for Carer’s Allowance, get some advice first.

Guarantee Credit

THIS is calculated by comparing your income with the amount the Government thinks you need to live on. This amount is called theStandard Minimum Guarantee. For 2011/12, the amount for single people is £137.35 per week, or £209.70 per week if you are a couple.

If you add the Standard Minimum Guarantee to relevant additional amounts, it will equal the total you are due and this is called the Appropriate Minimum Guarantee. If you earn any income, it is deducted from your Appropriate Minimum Guarantee and the figure left is the amount of Guarantee Credit you can claim.

If you think your calculation might be too complex to work out, call the Pension Credit Helpline on 0800 99 1234.

Calculating Your Appropriate Minimum Guarantee: Your Appropriate Minimum Guarantee is made up of the Standard Minimum Guarantee and extra amounts for severe disability or a carer and/or housing costs.

Your Appropriate Minimum Guarantee will go up if you or your partner start receiving a state benefit such as Attendance Allowance as this means you’ll now be entitled to the severe disability additional amount.

So, What Is Your Income?: Your capital is not taken into account in this calculation unless it is over £10,000, in which case every £500 is assumed to give you a weekly income of £1. This is known as assumed income. This applies to you regardless of whether you’re single or in a couple.

There are various types of income that count including pensions, earnings, state benefits and annuity payments. All the income is assessed after tax and national insurance deductions and half of any contribution to a works or personal pension.

Income that is totally ignored includes Attendance Allowance and Constant Attendance Allowance, Social Fund payments and Disability Living Allowance. Some parts of weekly income that don’t count towards income include £5 of your earnings if you’re single, or £10 if you’re a couple.

For Guarantee Credit, your weekly income after disregarded amounts is added together. The calculation is then quite simple: your income is deducted from your Appropriate Minimum Guarantee to work out your Guarantee Credit.

Calculating Savings Credit

THERE is a limit to how much Savings Credit you can receive. This is £20.52 per week for a single person and £27.09 per week for couples. Unlike Guarantee Credit, there are some forms of income that don’t count as “qualifying income” for Savings Credit.

Calculating Savings Credit is similar to Guarantee Credit. But one difference is that if you added the following to your income for Guarantee Credit calculation, you can deduct them for your Savings Credit calculation: Working Tax Credit, Maternity Allowance, Incapacity Benefit, contribution-based Jobseeker’s Allowance, Severe Disablement Allowance and maintenance payments made by your spouse/civil partner, or ex-spouse/civil partner.

If your income is the same or less than the threshold amount that applies to you, then you’ll not be entitled to Savings Credit. The 2011/2012 threshold levels are £103.15 per week for single people and £164.55 per week for couples.

If your income is higher than the threshold amount, look at the following example.

Here, to illustrate the calculation, we compare Mr Smith’s qualifying income of £160.00 per week with his Savings Credit single person threshold of £103.15 per week.

The difference between £160.00 and £103.15 is £56.85, and 60% of this is £34.11. This is more than the maximum single Savings Credit payment of £20.52 per week. If the difference is less than £20.52, then £20.52 per week will be your Savings Credit entitlement.

You may still get the Savings Credit even if the money you have coming in is up to about:

• £188 a week if you are single
• £277 a week if you have a partner

These amounts may be more if you are disabled, have caring responsibilities or certain housing costs, such as mortgage interest payments.

Housing

YOUR appropriate amount may also include an extra sum for certain housing costs if you own your own home. The amount of help might be restricted if you’ve a loan of more than £100,000, or your housing costs are thought to be excessive. If you are getting Pension Credit or have been getting it within the last 26 weeks, you will only be able to get help with the interest on a new loan in certain circumstances. Contact the Pension Service for more information. So, apart from the above restrictions, if you are 60 or over, the housing costs that can be included are: mortgage interest if you are buying your home, the interest on loans for certain home improvements and ground rent for leaseholders. Charges for wardens and alarm systems in sheltered housing schemes are not covered. They are now covered by the Supporting People scheme,

If you get Guarantee Credit, you’ll be entitled to the maximum amount of Council Tax Benefit and Housing Benefit. This usually covers your rent and Council Tax. If you put in a claim for Pension Credit, you should be asked if you also want to claim Housing Benefit/Council Tax Benefit. You will be given a form to complete, which means you don’t have to submit the same information to both the local authority and the Pension Service.

If you live in someone else’s house, for example with your son and his family, your Pension Credit will be calculated in the normal way.

People 60 and over living permanently in care homes might also be entitled to Pension Credit.

If you get the severe disability addition as a part of your Pension Credit, this will normally cease after 28 days of being in hospital when your Attendance Allowance, or Disability Living Allowance also stops.

If you go abroad, your Pension Credit stops after 13 weeks.

How To Claim

TO CLAIM Pension Credit, there is a free phone number you can use to request a claim form, or to make an actual claim: it is 0800 99 1234. You can either apply over the phone or ask for a form to be sent to you. Home visits from benefits staff to help you fill in the form can also be arranged. The phone line is open from 8am to 8pm Monday to Friday and 9am to 1pm on Saturday. For more details about claiming, contact the Pension Service on (free) 0800 731 7898. You can claim Pension Credit, Housing Benefit and Council Tax Benefit in one phone call, without needing to sign a form. You’ll be asked to supply evidence to support your claim within a month of submitting it.

Pension Credit can also be backdated for up to three months as long as you have met the entitlement conditions.

Change Of Circumstances

WHEN you get a letter about your Pension Credit, it will tell you whether an “Assessed Income Period” (AIP) has been set. If it has, this means that during the period stated, you’ll not need to tell the Pension Service if your retirement provision (income from pensions, annuities and savings) changes.

People aged 80 or more who apply for Pension Credit will usually be given an AIP that lasts indefinitely. But even when an AIP has been fixed, there are still changes you’ll need to report such as: being widowed, getting married; and going into hospital. An AIP is not set if you are under 65

Pension Credit can be paid by direct transfer into a bank, building society or post office account. It can also be paid by cheque.

Contacts List

Benefit Enquiry Line: (free) 0800 88 22 00, (free), www.direct.gov.uk/disability-money

Citizens Advice Bureau: 020 7833 2181, www.adviceguide.gov.uk

Disability and Carers Service: 0845 712 3456, www.dwp.gov.uk/lifeevent/benefits/dcs/

Carers UK: (free) 0808 808 7777, www.carersuk.org

Pension Service - National Helpline for Pension Credit: 0845 60 60 265, www.thepensionservice.gov.uk

*Please note the details published on this page are targeted at people aged 50 or more and refers to the situation in England.

**Also, please note that the information included here may change from time to time, so please take legal advice if you are in any doubt.