In our weekly series, readers can email in with any question about retirement and pension saving to be answered by our expert, Tom Selby, director of public policy at investment platform AJ Bell. There is nothing he doesn’t know about pensions. If you have a question for him, email us at money@inews.co.uk.
Question: My income is slightly above the pension credit threshold but I can’t figure out if unavoidable costs I incur – namely ground rent and service charges on my property – are taken into account? And is there anything else the DWP will consider when assessing my claim? The winter fuel payment decision has made this more pressing, but figuring out if I’m entitled to pension credit is incredibly confusing, so any help you can give would be greatly appreciated!
Answer: Pension credit is a top-up payment made to people over state pension age with incomes below a certain level. The income threshold for claiming pension credit will be different if you are single or part of a couple.
In 2024/25, the single pension credit income threshold is £218.15 per week, while for a couple it is a joint weekly income of £332.95. If your income is below this threshold, pension credit will provide a top-up to the relevant threshold amount.
Pension credit also provides a gateway to various other valuable benefits including free TV licences for the over-75s and, of course, the winter fuel payment, meaning it is absolutely critical those who are entitled make a claim, even if the initial top-up is only for a few pounds.
Income that counts towards your pension credit assessment includes your state pension, other private pensions, earnings from employment and self-employment, and most social security benefits.
There are, however, a number of benefits and payments that don’t count towards your income, including housing benefit, the disability living allowance and personal independence payments. This means it is possible people who have income above the threshold could still make a successful claim once these ‘disregarded’ benefits have been removed from the calculation.
If you have savings worth more than £10,000, these will also be added to your income for the purposes of your assessment, with £1 of weekly income added for every £500 of savings above this amount.
While the value of the home you live in is not included in your assessment, unfortunately ground rent and service charges associated with leasehold properties aren’t deducted when determining your income for pension credit. However, if you do qualify for pension credit, you could also receive financial help when paying these costs.
Without knowing your personal circumstances, I cannot say for certain whether or not you will qualify for pension credit. The easiest way to check if you might be eligible for pension credit is to use the government’s online tool, which you can find here. You can also get help with your application from the DWP over the phone or from charities like Age UK.
One really important point to note for anyone considering making a pension credit application is that, in relation to the winter fuel payment, the clock is ticking. In order to receive the winter fuel payment, worth up to £300, you need to have been in receipt of pension credit during the ‘qualifying week’ of 16 to 22 September 2024.
You can backdate your claim by up to three months, meaning you need to get your application in by 21 December at the latest if you want to qualify for the payment.
