Check Pension Credit eligibility NOW to unlock an extra £324 cost of living payment - plus a further £900 payment next year

Pensioners must apply for Pension Credit by 18 December to qualify for £324 payment. We explain who is eligible and how to claim

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Pensioners have just a few days left to claim Pension Credit and qualify for an extra £324 cost of living payment.

This payment is on top of the pensioner cost of living payment, worth £150 or £300, that was paid with the Winter Fuel Payment.

The government is urging pensioners to check if they qualify for Pension Credit, which is worth £3,500 a year on average, and also gives people access to other benefits, such as cold weather payments and help with NHS costs. 

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Pension Credit is one of the most under-claimed benefits, with about 850,000 eligible pensioners failing to make a claim for the benefit each year. This is partly due to lack of awareness, and because Pension Credit is complicated and can be difficult to understand.

Pension Credit is separate from the state pension, and paid to people of state pension age on low incomes, even if they have savings, a private pension or own their own home.

By claiming Pension Credit, it will also unlock extra cost of living payments: a £324 payment if an application is made by 18 December, and then a further £900 due to be paid in instalments next year.

The £900 payment is on top of the £300 cost of living payment that will be paid to all pensioner households in 2023.

We explain what Pension Credit is, who can claim, how much it’s worth - and how acting fast and claiming it now could help you get the £324 cost of living payment.

What is pension credit?

Pension Credit is a payment that helps with living costs if you’re over state pension age and on a low income. 

There are two parts: guarantee credit and savings credit. Guarantee credit tops up your pension income to a certain level, and is available to those on low incomes. Savings credit is only available to those who reached state pension age before 6 April 2016 and had some money saved for retirement, for example in a personal or workplace pension.

Even if you’re only entitled to a small amount of money, it’s worth claiming as it will help you qualify for other benefits, as well as providing extra income.

If you get Pension Credit, you can get the following help:

  • Support for mortgage interest if you own the property you live in
  • Housing benefit if you rent the property you live in
  • Council tax reduction
  • A free TV licence if you’re 75 or over
  • Help with NHS dental treatment, glasses and transport costs for hospital appointments
  • Cold weather payments
  • Warm home discount
  • Christmas bonus (opens in new tab) (only for those who receive the guarantee element of Pension Credit)
  • A discount on the Royal Mail redirection service if you’re moving house
  • £324 cost of living payment (if you apply by 18 December, 2022), and £900 cost of living payment (to be paid in 2023)

Can I claim Pension Credit now and get the £650 cost of living payment?

Yes, but you need to hurry as applications must be made by Sunday, 18 December. This is the deadline for backdated claims for the £324 cost of living payment to be made.

Tom Selby, head of retirement policy at the investment platform AJ Bell (opens in new tab), explained: “Pension Credit claims can be backdated by up to three months, meaning 18 December is the last opportunity to trigger the cost of living payment for the period 26 August to 25 September. You only need to be eligible for Pension Credit for one day during that period in order to qualify for the full £324 payment.”

The Department for Work and Pensions (DWP) has been slow processing Pension Credit claims, with a backlog of 60,000 applications at the end of October, but this shouldn’t impact your eventual entitlement. 

The key is that you must either be in receipt of Pension Credit, or have started a claim which is later successful, as of 18 December 2022, to receive the £324 cost of living payment.

How much is pension credit worth?

Pension Credit tops up a pensioner’s weekly income to £182.60 if single (or £9,495 a year). For those with a partner, the joint weekly income is topped up to £278.70 (£14,492 a year). This is the guarantee credit part of pension credit.

For those with a severe disability, guarantee credit is boosted by an extra £69.40 a week. You must get one of the following benefits to be eligible: attendance allowance, the middle or highest rate from the care component of disability living allowance, the daily living component of personal independence payment, or armed forces independence payment.

If you care for another adult, you could get an extra £38.85 a week, provided you get carer’s allowance (or you’ve claimed carer’s allowance but are not being paid because you already receive another benefit paying a higher amount).

For those responsible for a child or young person, you could get an extra £56.35 a week. The child or young person must normally live with you and be 19 or younger. If the child or young person is disabled, you may get a further payment.

The final top-up within guarantee credit is to help with housing costs. An extra payment may be made to cover ground rent if your property is a leasehold, or service charges.

The savings credit part of Pension Credit is worth up to £14.48 a week if you’re single, or up to £16.20 a week if you have a partner.

Who can claim pension credit?

You must live in England, Scotland or Wales and have reached state pension age (currently 66) to be eligible for Pension Credit.

When you apply for guarantee credit, your income is calculated; if you have a partner, your income will be calculated together.

The DWP defines income as your state pension and other pensions (even if they’ve been deferred), earnings from a job or self-employment, and most benefits, such as carer’s allowance. However, not all benefits are counted as income. Attendance allowance, child benefit, disability living allowance, personal independence payment, winter fuel allowance, housing benefit, council tax reduction and the Christmas bonus are excluded.

Your savings and investments are also taken into account. This can include shares and any property you own (apart from the home you live in). If you have £10,000 or less, this will not affect your Pension Credit application. 

If you have more than £10,000, every £500 over £10,000 counts as £1 income a week. For example, if you have £12,000 in savings, this counts as £4 income a week.

If your weekly income is below £182.60 then guarantee credit will top you up to that amount.

If you’re claiming as a couple and your income is below £278.70 it will be topped up to that level.

The rules around who can claim savings credit are different. It’s only available if you reached state pension age before 6 April 2016, and you have some money in savings or a pension.

You must have a weekly income of at least £153.70 a week if you’re single or £244.12 a week if you’re claiming as a couple.

The eligibility criteria can seem incredibly complicated, and is probably one of the reasons so many pensioners don’t bother claiming. 

Use the government’s pension credit calculator (opens in new tab) to work out if you’re eligible and how much you’ll get. Unfortunately, to make matters even more complex, not everyone can use the calculator, for example if you or your partner own more than one property or are self-employed. If that’s the case, call the helpline on 0800 99 1234.

How to claim pension credit

You can apply for Pension Credit online, by phone (0800 99 1234, Monday to Friday, 8am to 6pm) or by post. If you haven’t reached state pension age yet, you can send in your application up to four months before this date. 

If you have reached state pension age, your application can be backdated by three months only, meaning you could get up to three months’ pension credit in your first payment.

If you’re racing to meet the 18 December deadline, your best bet is to make your claim online or over the phone, rather than by post (which could be affected by the Royal Mail strikes). 

You’ll need your National Insurance number when you apply, plus details of your income, savings and investments. If you have a partner, you’ll need the same information about them too.

If you have claimed in the past and were unsuccessful, you can claim again in the future. For example, a change in your circumstances could make you suddenly eligible for pension credit.

Will pension credit go up next year

Chancellor Jeremy Hunt announced last month that Pension Credit would rise by 10.1% next April, which is in line with inflation. The state pension will also rise by this amount.

This means that from next April, if you are over state pension age, single and your income is less than £201.05 a week, Pension Credit will top you up to that amount. 

For a couple, the combined income figure will be £306.85 a week.

Why aren't people claiming pension credit?

Put simply, pensioners are missing out on this top-up payment to their pensions because they do not know the extra financial help is there. 

The government knows there is a problem with the take-up of Pension Credit, so much so that even Rishi Sunak mentioned it earlier this year when unveiling a £15 billion cost of living support package.

The take-up rate has started to improve in recent years. In 2018-19, 920,000 pensioner households were entitled to, but not receiving, Pension Credit. A year later, the figure had fallen to 850,000.

However, this is still a huge number of people who are missing out on hundreds, if not thousands, of pounds that could really boost their income in retirement - and make a real difference at a time of soaring food, fuel and energy costs.

Stephen Lowe, group communications director at retirement specialist Just Group (opens in new tab), said: “Pension Credit is designed to top up the incomes of the poorest pensioners but a third of those entitled to it – about 850,000 families – are failing to claim.

“The human story to this is the hundreds of thousands of people who are struggling to make ends meet who may not realise financial help is available or do not know how to navigate the system.”

Some pensioners may simply be unaware Pension Credit exists, while of those that do, they may think they aren’t entitled to it because they own their own home or have some savings. Others may not feel comfortable taking money from the government.

But, Pension Credit isn’t just a top-up payment; it is also a gateway to receiving other benefits, like extra cost of living payments (which are paid to people on benefits like Universal Credit and Pension Credit), help with paying a mortgage or rent, council tax reduction, a free TV licence if you’re 75 or over, and help with NHS dental treatment, among other things.

Jon Greer, head of retirement policy at the wealth manager Quilter (opens in new tab), said: “The message is clear: if you don’t claim the credit, you won’t get the help. The government needs to look at how they can publicise Pension Credit effectively to qualifying pensioners.”

Ruth Emery

Ruth Emery is contributing editor at The Money Edit. Ruth is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times. A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service. Outside of work, she is a mum to two young children, a magistrate and an NHS volunteer.