PENSION CREDIT RULES

[Ann]

Someone told me that the rules for pension credit have changed recently and that although they are still means tested, there is a different limit to the amount of savings you have, in fact you are rewarded for actually having savings. Can this be correct?

[trt]

I think different limits to the amount of savings you have been changed and you are allowed more than before Ann.

Cant remember the amount but the old rules was £16,000, but might be wrong.

[maclarencat]

There are 2 types of pension credit One is guaranteed pension credit which makes your pension up to a specified amount if you have below the pension credit limit and the other is savings pension credit and if you have a low income but have some savings you are awarded extra money on your pension.

[factor-fiction]

I've never been convinced that Savings Pension Credit is what it is claimed to be- it always seemed to me when i was helping an elderly relative that the more savings she had the less pension credit she got. I wondered whether it was just a ruse to get you to declare all savings- then they had a reason to REDUCE your pension credit.
Please can someone convince me otherwise? I know there is an online calculator on the DirectGov site but it seeems to tie up my laptop for hours.

[factor-fiction]

I have just checked my mum's pension credit entitlement using the online pension credit calculator. She gets the basic state pension plus a private pension (from deceased husband) worth £10 a week.
I then entererd 4 different levels of savings .
Savings 1000 ---> pension credit £30pw
savings 3000 ----> pension credit £30pw
savings 6000 ----> pension credit £30pw
savings 10000----> pension credit £30pw
savings 15000----> pension credit £26pw

So it still looks to me as if this Pension Savings Credit is an illusion. It seems to me that savings don't lead to more credit- in fact they lead to pension credit being REDUCED once your savings exceed a certain amount.

Have I misunderstood?

[maclarencat]

I think you misunderstand factor30. You are being told about guaranteed pension credit not savings pension credit and this does reduce if you have savings. With savings pension credit you would not be eligible for guaranteed pension credit. You would already be up to the threshold . But if you are only a couple of pounds over but have say £5000 in the bank they will allow you a little extra money each week and this is savings pension credit.

[factor-fiction]

Hi maclarencat. Thanks. I got the calculator of the directgov website.
Have you got a link to a savings credit calculator then please as I'm still not sure I understand it-I think you are saying pensions credit is a genuine credit but it only applies if your income is such that you don't get guaranteed Pensions Credit.

[factor-fiction]

^off

[THECORBYLOON]

Age 65 or over - Savings Credit
If you are aged 65 or over and living in Great Britain you may be entitled to Savings Credit. You may get the Savings Credit on its own or with the Guarantee Credit. You may be entitled to Savings Credit if you:

•are aged 65 or over
•have made some provision towards your retirement such as savings or a second pension
If you have a partner, at least one of you must be 65 or over to get the Savings Credit.

The Savings Credit can be up to:

•£20.52 a week if you are single
•£27.09 a week if you have a partner
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.

[factor-fiction]

Thanks the corbyloon- what I am looking for is a calculator,, similar to the online calculator for guaranteed pension credit. I've helped a few relatives sort out pensions credit and no-one at DWP has ever mentioned savings credit- all that has ever happened is guaranteed pension credit has been reduced below the maximum by penalising them for having small private pensions and some savings.
I'm hoping to be convinced it's not an example of 'smoke and mirrors'

[THECORBYLOON]

There’s not a separate savings credit calculator as such (as far as I can see) it’s taken into account as part of the Pension Credit Calculator.

As long as you’re 65 and the income is at least £103.15 for a single person or £164.55 per week, you may be entitled to the Savings Credit. There are examples on the Pension Service site but it doesn’t explain how the Savings Credit figure is arrived at but I'll have a go for you.

One of the examples is a couple whose income is £218.90 per week who qulify for Savings Credit of £23.41 per week. They have £12,000 in savings and that counts as £4 a week (because they say it’s £1 for every £500 above £10,000) and the other £214.90 is from state pensions and a personal pension.

The most Guaranteed Pension Credit for a couple is £209.70 per week and if the income exceeds that, the Savings Credit is reduced by 40% of the difference between the income and the £209.70.

In this example, the couple has an income that is £9.20 more than the maximum amount of Guaranteed Pension Credit and 40% of that is £3.68. Take that off the maximum Savings Credit of £27.09 for a couple and that leaves them with £23.41 a week. The maximum Savings Credit for a single person is £20.52 a week

[factor-fiction]

Thanks thecorbyloon.
It all sounds very complicated (deliberately so, I suspect) and I'll need to ut some time aside to work it out.
I still don't see why it has never been mentioned whenever relatives have claimed pension credit, nor am I yet clear why on all the calculations I put into the Pension Calculator the income seemed to fall as savings increased. I'm wondering whether it's only really a benefit fit to those on higher incomes whereas for fairly low earning pensioners savings are penalised.

The whole system seems a mess to me. A relative of mine had paid into a private pension and it gave her the princely sum of £10 a week in pension. But she was no better off because her pension credit was then reduced by £10 a week.

Another relative was awarded £20000 in damages for a road accident to pay for extra care, and the DWP reduced her pension credit as they said she had too high a level of savings (although after she died I was told they shouldn't have taken all of that into account).

Another relative refused to apply for pension credit as she felt it was like begging, and another refused to claim as she felt people were prying on every detail of her private life.

The whole system needs simplifying. How some pensioners who are unwell or not very good at filling in forms cope with it, i don't know

[THECORBYLOON]

Should also add that the Savings Credit is 60% of the difference in income between £103.15 - £137.35 pw for single folk and £164.55 - £209.70 pw for couples. Thats why folk are "rewarded" for having savings.

[Shazza36]

You can only receive the savings credit part if you are over 65 years old, if you are between 60 and 64 you can only receive pension credit which is fully means tested.