State pension

Pension credit

By Paul Davies

Article 4 of 5

Put us to the test

Our Test Labs compare features and prices on a range of products. Try Which? to unlock our reviews. You'll instantly be able to compare our test scores, so you can make sure you don't get stuck with a Don't Buy.

Pension credit

In this guide you'll discover how pension credit works and what you'll need to do in order to claim it. 

If you're less well off, there is help available to you to boost your state pension. This comes in the form of pension credit.

Pension credit is awarded to you based on your earnings - known as a means-tested benefit - and tops up your basic state pension. 

It's made up of two parts, called guarantee credit and savings credit. The savings credit element has disappeared for those reaching state retirement age on or after 6 April 2016.

Around 4 million people are entitled to pension credit but, according to the government, a third of those fail to claim it. This guide explains how pension credit works, and helps you find out if you're eligible for it. 

Go further: Tax credits - learn how other credits work in our dedicated tax guide

How guarantee credit works

Guarantee credit tops up your weekly income to £155.60 for single people and £237.55 for couples in 2016/17. To qualify for it, you must:

  • live in the UK
  • have reached pension-credit qualifying age (the same as state pension age) if you're a woman 
  • have reached the state pension age of a woman born on the same day as you if you're a man
  • have weekly income below £155.60 if you're single and £237.55 if you're in a couple.

If you're a carer, have severe disabilities or certain housing costs, you might qualify for more guarantee credit.

When you apply for guarantee credit, the government looks at all of your income. This includes both your basic and additional state pension, any income from other pensions, income from any jobs you have and any savings over £10,000. 

Some benefits, such as housing benefit, council tax reduction and attendance allowance, aren’t included, nor are your personal possessions or your home. 

How savings credit works

The government will give people a little extra money to reward them for saving towards their retirement. This comes in the form of savings credit, which has now disappeared for those reaching state retirement age after April 2016.

There's a few criteria that you needed to meet (and still do) before you qualified for savings credit:

  • you have a minimum income of £133.82 a week if you're single, and £212.97 a week if you're in a couple in 2016/17
  • you or your partner must be 65 or over
  • you must be living in the UK
  • you must have made some provisions for your retirement, such as savings or a second pension.

The way it's calculated works like this: for every £1 by which your income exceeds the savings-credit threshold (£133.82 for a single person in 2015/16 and £212.97 for a couple), you get 60p of savings credit. 

  • So, say you have an income of £119.30 a week from the basic state pension, and an income of £29.52 a week from a private pension, your total weekly income would be £148.82
  • Your weekly income is £15 over the savings-credit threshold. This means you would qualify for £9 a week of savings credit. 

The maximum savings credit you can get per week is £13.07 for a single person and £14.75 for couples.

If your income is less than or equal to the savings-credit threshold, you won’t qualify for this benefit.

Go further: Which? Money Compare tables - let you search hundreds of savings accounts and cash Isa deals

How to claim pension credit

There are two ways you can claim pension credit. You can either post form PC1 (downloadable from the Gov.uk website) to your local pension centre, or phone The Pension Service on 0800 99 1234. Visit The Pension Service's Find your pension centre page to find out where yours is and how to contact it.

To claim, you will need:

  • your National Insurance number
  • information about your income, savings and investments
  • your bank account details,

Changes to pension credit

The government's changes to the state pension, which came into force in 2016, include the abolition of the savings-credit element of pension credit. The guarantee-credit element will continue to provide a safety net to lower-income pensioners.

  • Last updated: April 2016
  • Updated by: Paul Davies