What is pension credit and how much can i save when i am at it?

If you’ve already approached state retirement age, or are set to do so in the next few years, you might want to take a look at something called retirement credit.

This is a benefit paid to people of at least retirement age to help them with their essential daily tasks, such as heating or paying their fixed charges, if they have a small income.

The Pension Credit benefit has two components: the Guarantee Credit element and the Savings Credit element.

In order to get the collateral credit element, you must be of state retirement age, live in the UK and not have a large amount of money in savings.

Read more: How much is the state pension for next year? Retirees set to see their annual jackpots increase

The government will review your application and assess your pension funds, income, and any other money you receive other than certain benefits such as housing allowance.

However, they will not look at personal assets such as the value of your home if you own your own property.

The amount of collateral credit the applicant will obtain will depend on these circumstances and the total amount they will receive will be referred to as their “appropriate amount”.

The second part of the pension credit is called the savings credit element. It is paid £ 14.04 per week if you are single or £ 15.71 per week if you have a partner.

To get money under the Savings Credit component, you must have reached state retirement age before April 6, 2016 and have made certain arrangements for your retirement, such as having a second income or a private pension. The threshold is currently set at a minimum of £ 153.70 per week if you are alone or £ 244.12 per week if you have a partner, but it is reviewed by Parliament at certain intervals and adjusted if necessary.

You can get the savings credit element of the pension credit without getting the collateral credit element, and you can still claim that part of the benefit even if your income is more than the “appropriate amount” as stipulated. in your collateral credit score.

Be aware, however, that your pension credit will decrease if you have savings. At this time, only savings over £ 10,000 are taken into account when assessing a pension credit applicant and it works as follows.

For every little money you have at £ 500 above £ 10,000, your pension credit will be reduced by £ 1 per week. If you have £ 11,000 in savings it will count as £ 2 per week and your pension credit will decrease accordingly.

You can start claiming a pension credit up to four months before you reach state retirement age. You can start an online application on the government website.