I am 75 and live alone. I get the basic state pension – alongside a very small private one – but am struggling in the cost-of living. Though I own my house, the increasing cost of food and other basic items mean I’m some weeks finding myself in negative budgeting. Could I be entitled to pension credit – and how can I check this?

Anonymous

Tom Selby, AJ Bell Head of Retirement Policy, says:

Let’s start with how the state pension works and Pension credit is a key benefit provided by the state which often goes unclaimed. The Government has previously estimated over 850,000 eligible retirees fail to claim each year, with the average pension credit payment worth around £3,500 a year, according to the Department for Work and Pensions.

In 2023/24, if you are over state pension age (66), single and your income is less than £201.05 a week, you should qualify, with the payment topping up your income to that level. For a couple, both of whom have to be over state pension age, the combined income figure is £306.85.

In relation to pension credit, your income includes your state pension and any other pensions you have, other savings and investments, employment or self-employment earnings and most social security benefits. If you have £10,000 or less in savings and investments, this will not affect your pension credit claim.

If you have more than £10,000, every £500 over £10,000 counts as £1 income a week. For example, if you have £11,000 in savings, this counts as £2 income a week.

As you live in your home, its value should not be considered as part of your pension credit application. If you owned a property other than the home you live in then this could affect your claim.

For those who are entitled to receive it, claiming pension credit is also important because it acts as a gateway to other benefits. Those who claim pension credit currently qualify for cost-of-living payments. These payments are designed to help people through the current period of high inflation and are targeted at low-income households.

To be eligible for the latest cost-of-living payment, which is worth £300, you need to have been entitled to pension credit between 18 August 2023 to 17 September 2023. It is possible to backdate your pension credit claim for up to three months and you only need to have been entitled to the benefit for one of these days to qualify for the full £300 cost-of-living payment.

If your application for pension credit for the period is successful, you will be paid the cost-of-living payment automatically – but it’s up to you to make a claim.

It is possible to apply for pension credit online, over the phone or by post. If you are unsure how to go about completing your application, organisations like Age UK and Citizens Advice can help.

There is also a handy website which allows you to find out if you are eligible for pension credit and how much you might get.

DO YOU HAVE A QUESTION ON RETIREMENT ISSUES?

Send an email to asktom@sharesmagazine.co.uk with the words ‘Retirement question’ in the subject line. We’ll do our best to respond in a future edition of Shares.

Please note, we only provide information and we do not provide financial advice. If you’re unsure please consult a suitably qualified financial adviser. We cannot comment on individual investment portfolios.

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