Half a million pensioners have been given a financial boost this week following the introduction of new rules to make pension credit fairer.
Pension credit, as well as council tax and housing benefit, is calculated using people’s annual income, including savings. The Department of Work and Pensions will now ignore the first £10,000 of a pensioner’s savings. It previously only overlooked the first £6,000 of savings.
Charity Help the Aged and Age Concern, which merged earlier this year, estimate the change will give 540,000 pensioners a boost of up to £8 a week.
However, there are concerns that as much as £5.4 billion of means-tested benefits goes unclaimed each year – and an estimated one in three pensioners are missing out by failing to claim pension credit.
“'The fact that savings up to £10,000 will be ignored for the purposes of working out benefit entitlements should encourage more older people on modest incomes to check whether they might be missing out on financial help which is rightfully theirs,” says Andrew Harrop, head of policy at Age Concern and Help the Aged.
"This small improvement, though, won’t hide the fact that the means-tested system is failing to help many of the older people who most need its help.”
The charity wants the government to start paying benefits to eligible people automatically, to ensure no one misses out. In the meantime, it’s up to individuals to know what benefits they are entitled to and claim these accordingly.
Pension credit is available to people aged 60 or over, and guarantees a minimum income by topping up eligible people’s weekly income to £130 if you are single or £198.45 if you have a partner.
People with caring responsibilities, severe disabilities or certain housing costs, could claim more in pension credit.
Income that's taken into account includes:
• Your state pension, as well as occupational and private pensions
• Most social security benefits, including carer's allowance
• An 'assumed income' of £1 a week for every £500 you have in capital over £10,000. This might be savings, investments and property that’s not your main home.
• Earnings after tax and expenses whether you are in employment or self-employed. This includes 50% of any pension contributions you make.
• Working tax credit
If you have a partner, their income will be included in the pension credit calculation.
Income that's ignored includes:
• Attendance allowance
• Christmas bonus
• Exceptionally severe disablement allowance
• House benefit
• Council tax benefit
You can find out what benefits you're could claim at entitledto.co.uk