Pensions credit

What's that?

A new means-tested benefit for people aged 60 or over, launched by the Department for Work and Pensions and adminstered by the Pension Service. The government claims that more than 5 million pensioners will be better off. It comes in two parts: a guarantee credit if you are 60 or over that tops up your income to a guaranteed level, and a savings credit if you are 65 and over.

Who is entitled to it?

That depends on level of income (after deductions) and savings. Single people earning less than £139.10 a week, or couples on less than £203.80, are likely to qualify. Disabled people may be entitled even if their earnings exceed these amounts, as might people with certain housing costs, such as mortgage interest payments. The free helpline for advice on entitlement is 0800-991234.

What is the guarantee credit?

Everyone aged 60 and over is guaranteed an income of at least £102.10 a week for single people and £155.80 a week for couples.

How is it different from the old minimum income guarantee?

People who have saved a moderate amount for their old age are rewarded for having done so. The savings credit gives single claimants £14.79 a week, and couples £19.20.

So why do critics say it penalises people who save?

The first £6,000 of total savings is ignored (£10,000 if in residential care), but after that an income of £1 a week for every £500 (or part of £500) is assumed. This is added to a claimant's income, and if the total exceeds £139.10 a week they are unlikely to be entitled to the pension credit.

What counts as income?

Pensions, some benefits and wages. Apply before October 2004 and money will be backdated to October 2003.