The Pension Credit
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The new pension credit becomes effective from April 2003. The
Pensions credit works in addition to the MIG and is intended to provide an
additional incentive to save for your own retirement.
The pension credit is an unnecessarily complicated animal. The
best thing to do is find out from the Pension Service whether you
might be entitled to the benefit and then contact your local social
security office to apply.
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How it works
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The pension credit is divided into two parts from April 2003. The
first part is called the "guarantee credit" and is a replacement for
the MIG which was abandoned from April 2003. The guarantee credit is
designed to provide pensioners with a minimum level of pension
income. The second part is called the "savings credit" and is
designed to encourage other forms of retirement savings by granting
additional benefit to those who have some form of retirement income
other than from the state.
The Guarantee Credit
The guarantee credit applies from age 60. This is designed to
ensure that every pensioner over age 60 has an income of at least
£102.20 per week (£155.80 for couples). Therefore if your only
income in retirement is your basic state pension (and you are
single) then you will receive an additional amount to take your
total income up to £102.20. If your income in retirement is in
excess of the guarantee credit level then you will not receive any
guarantee credit (you may however receive some savings credit)
The Savings Credit
The savings credit applies from age 65. You must also have
retirement income of over the basic state pension but under £139 per
week. The amount of the savings credit is 60p for every £1 of income
you have above the basic state pension. However there are further
complications if the level of your income is above the guarantee
credit level!
The maximum savings credit is £14.79 for an individual and £19.20
for a couple.
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Further information
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You can see if you
qualify for the Pension Credit by using the charts published by
The Pension Service.
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Get the FREE Pension calculators from Essential Pensions.
No money, no
registration, just include one line of HTML in your web page.
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If you have a pensions
related question then please let us
know.
If it's something other people
would find useful then we will post an answer in our Frequently Asked Question
(FAQ) area.
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Read the guide to
investment in the pensions guide. It explains what you need to
think about before investing for your retirement.
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Tell a friend about
Essential Pensions. Send an automatic message to your friends
email account about the site.
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Use our online calculator
to get an estimate of your basic state pension.
Its free and
simple to use you can even include it on your own website!
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