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Wednesday, 3 October 2023

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Pensions and retirement planning

Income, benefits and Pension Credit

Your income may affect how much Pension Credit you can get. Find out more about how your income may affect Pension Credit, how Pension Credit is paid and how it might affect your other benefits.

Income that is counted towards Pension Credit

The amount of Pension Credit you get depends on how much income you have each week and how much you have saved or invested.

The following types of income are taken into account when calculating your Pension Credit:

State Pension (including basic State Pension and additional State Pension)
occupational and private pensions
most social security benefits like Carer's Allowance
£1 a week for every £500 (or part of £500) of 'capital' you have over £10,000 - capital includes savings and investments, and property that's not your main home
earnings after tax and expenses from employment or self-employment, less half of any company or personal pension contribution you make

If you have a partner you and your partner’s income and capital will be added together when calculating your Pension Credit.

The term ‘partner’ refers to your husband, wife or civil partner. Or the person you live with as if they were your husband, wife or civil partner.

If you're a self-assessment tax payer

If you're a self-assessment taxpayer who claims Pension Credit - you must tell The Pension Service how much Income Tax you expect to pay for the current tax year. This will help make sure you are getting the right amount of Pension Credit and may mean you get more. This is because Pension Credit takes account of your net income after tax, including any tax on your State Pension (State Pension is taxable).

You can find out more about Income Tax by contacting HMRC.

Income Tax - the basics

How to contact HM Revenue and Customs

Income that is not counted towards Pension Credit

Income that is not counted towards Pension Credit includes:

Attendance Allowance
Christmas Bonus
Disability Living Allowance
Housing Benefit
Council Tax Benefit

Further information is available on the following benefits:

Attendance Allowance

Christmas Bonus

Housing Benefit

Council Tax Benefit

You may still get Pension Credit if you are living with your family. The Pension Service look only at your income and not at theirs. Also you may still get Pension Credit if you own your own home - the home you live in does not count towards your ‘capital’.

How Pension Credit is paid

All benefits, pensions and allowances are paid into the account of your choice, for example your bank account. This is the safest, most convenient and efficient method of payment.

How benefits and pensions are paid

What to do if your circumstances change

If your circumstances change, for example your capital goes up or down, you should contact The Pension Service. They will be able to look at your claim again to make sure you are getting the right amount of Pension Credit.

Contact The Pension Service

How to appeal about a Pension Credit decision

If you are refused Pension Credit or think it has been calculated wrongly, ask the office that dealt with your claim to reconsider the decision. If you are still unhappy with the outcome you can appeal to an independent Tribunal.

Find out more about the appeals process in the booklet 'If you think our decision is wrong'.