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What is pension credit?

Pension credit is an income-related benefit provided by the UK government that provides an additional retirement stipend to those on a low income. According to the UK government, around four million people are eligible for pension credit but a third do not claim.

It comes in several different forms and to claim you must fall into one or more of several categories. Pension credit is split into two parts: guarantee credit and savings credit. There is also the possibility of additional pension credits in some circumstances if you meet certain criteria. When you make a claim, the government will examine all sources of your income, including wages, savings and investments. The government will only take savings into account while assessing if they are greater than £10,000.

If your weekly income is below £155.60 for a single person or £237.55 for a couple, you have a severe disability, you are a carer or you have to pay certain housing costs, you will receive guarantee credit. Guarantee credit will top up your income to the aforementioned levels. The full amount you receive depends on the level of income and amount of investments and savings you have.

To receive guarantee credit, you must adhere to certain conditions. You or your spouse must be of pensionable age, which is currently 65 but will be going up to 66 in the near future. This applies to both men and women. You must also be a UK resident.

Savings credit is an additional payment for those who have saved towards their pension before retirement. You are highly unlikely to receive savings credit if you reach pensionable age on or after April 2016. You will receive up to (if eligible) £13.07 per week if you are single or £14.75 per week if you are a couple. You will usually only receive this if your income is above £133.82 a week if you are single, or £212.97 if you are married or in a civil partnership. Again, you must be over 65 to claim this benefit.

You may receive additional pension credit in special circumstances in addition to guarantee and savings credits if you are in a caring role, are disabled or are paying certain housing costs.

You can put in a claim before pensionable age, but you must reach 65 within the next four months. Once you have reached pensionable age, you do not need to claim straight away, but you should bear in mind that you will only be able to claim three months of previous payments, even if it has been more than three months since your 65th birthday.

There is no tax paid on any pension credits and you can still claim if you are working, as long as you are over 65.

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