I have £ 3.51 over the pension credit limit so I am losing a lot of other benefits
My husband is hospitalized and suffers from Alzheimer’s disease. He is 80 years old. I am told that he may not live very long now.
I look at my finances to see what I’ll get when I only get my pension. I am surprised that I am unable to claim a pension credit of £ 3.51 per week.
My state pension is £ 170.93 and I receive a small private pension of £ 9.68 per week.
Retirement question: I went over the £ 3.51 limit to claim a pension credit so I’m losing hundreds of pounds of other benefits (Stock Image)
My question is why, by having a private pension, which I paid while I was working and which takes me over the threshold of £ 3.51 per week, I am in a worse situation than someone else who can claim less than £ 177.10.
How can that be fair when if you make less than £ 177.10 per week you are entitled to endless help which makes me worse than the person getting the minimum amount.
In real money I am worse off by hundreds of pounds, for example because of a free TV license, help with glasses and dentist bills, etc.
Please could you explain why this is not on the £ 3.51 scale that I earn per week. I understand that there must be a line drawn somewhere, but the way it is going is very unfair to people like me.
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Steve Webb responds: You raised an important question about how assistance for low-income retirees is cut at certain income levels.
In this case, I think in your situation you might indeed be entitled to a pension credit (for reasons which I will explain) but I will also answer your broader question.
By focusing only on the pension credit, the idea of the benefit is to ensure that no one has to live on an income below a certain minimum level.
Steve Webb: Find out how to ask the former Pensions Minister a question about your retirement savings in the box below
For 2021/22, this level is £ 177.10 per week for a single person and £ 270.30 for a couple.
Under the rules of the “guarantee credit” element of the pension credit, persons with incomes below this level are supplemented to the minimum guaranteed level.
In your case, your total income from your state pension and private pension is £ 180.61. As this is above the guaranteed minimum level, you are not entitled to the guarantee credit.
While you have a few pounds better than a person on retirement credit in terms of weekly income, you are correct that people on collateral credit are also entitled to things like free TV licenses. (from age 75), a “warm hearth rebates” on their fuel bills and so on, and that may leave them better than you.
The problem is, these “passport benefits” (as they’re called) are on an all-or-nothing basis – if your income is below the guaranteed credit level, you get them in full, but if you’re just a dime. besides, you don’t understand them at all.
It creates a sort of “cliff edge” in the system and you are on the wrong side of that cliff edge.
In theory, it would be possible to withdraw these passport benefits on a more gradual basis. For example, you could design a system so that those who are at (say) £ 10 per week of the collateral credit level can get (say) half of their paid TV license.
But that would make the system much more complex and expensive to operate, so usually these additional benefits are simply cut off above a certain level.
However, what may be good news for you, depending on your age, is that for those who reached the statutory retirement age before April 6, 2016, there is a second element to pension credit – credit. savings.
This is an additional payment that rewards those who have private retirement income outside of their state pension.
I entered the two numbers you provided for your public and private pension into the gov.uk pension credit calculator, and assumed you have no other savings, and it says you would have entitled to a weekly supplement, presumably via the savings credit system.
If this is correct (and I don’t have all of your personal information so you will need to apply to make sure) then you will at least get some more help.
According to the gov.uk website, anyone with retirement credit aged 75 or over, even those who only benefit from the savings credit, will also be able to benefit from a free TV license.
You would * not * automatically qualify for the hot house rebate program, but your energy company may offer other rebates for those with relatively low incomes.
In addition, it should be mentioned that even for those who are just above the pension credit level, other income related aids may be available.
For example, if you are a tenant, you can still get help with your rent from your local authority, and you would almost certainly qualify for low income help with your municipal tax bills.
Finally, I was obviously very sorry to read that your husband is in very poor health.
In the event of death, you may be entitled to a higher state pension and / or widow’s pension from any company scheme to which he was a member, although this would of course affect the benefits you receive. so.
Ask Steve Webb about the pension
Former Pensions Minister Steve Webb is This Is Money’s Agony uncle.
It’s ready to answer your questions, whether you’re still saving, quitting work, or juggling your finances in retirement.
Steve left the Department for Work and Pensions after the May 2015 election. He is now a partner in the actuarial and consulting firm Lane Clark & Peacock.
If you would like to ask Steve a question about pensions, please email him at [email protected]
Steve will do his best to respond to your post in a future column, but he won’t be able to respond to everyone or correspond privately with readers. Nothing in his responses constitutes regulated financial advice. The published questions are sometimes edited for brevity or for other reasons.
Please include a daytime contact number with your message – this will be kept confidential and will not be used for marketing purposes.
If Steve is unable to answer your question, you can also contact The Pensions Advisory Service, a government-backed organization that offers free assistance to the public. TPAS can be found here and its number is 0800 011 3797.
StevWe receive many questions about the state pension forecast and about COPE – the equivalent of contracted pension. If you write to Steve on this topic, he answers a typical reader question. here. It includes links to several of Steve’s previous columns on state retirement forecasting and contracting out, which might be helpful.
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