THOUSANDS of pensioners looking to claim Pension Credit should be aware of a loophole that could see them lose out on benefits.
Pension Credit gives you extra money if you claim the State Pension and are on a low income.
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Over one million retirees get the financial support, with the figure expected to rise as more households look to claim the benefit to get access to the Winter Fuel Payment.
That is because cuts made by Chancellor Rachel Reeves mean only those on means-tested benefits – which includes Pension Credit – get the £300 support.
But now a fresh report published by the Social Security Advisory Committee has warned those considering applying for the support.
The document states that those claiming Child Tax Credit could actually be worse off financially if they moved to claiming Pension Credit
Child Tax Credit is given to parents or grandparents looking after children aged up to 16, or in some instances children under 20 if they remain in full-time education.
On average, the amount you receive per year comes to £545, but this can increase depending on the number of children you care for or if they are living with a disability.
But if you are already claiming the credit and then try to apply for Pension Credit, you will no longer receive the payments.
The report read: “There is a potential risk that some people may take steps to move onto Pension Credit in the belief that this would be beneficial, but “ultimately be financially disadvantaged.”
This is because they will lose their “transitional protection,” which is money the government gives as support to households as they move from other benefits to Universal Credit or Pension Credit.
This has been introduced as the government steams ahead with its managed migration process.
As part of the move legacy benefits – such as Tax Credits, Housing Benefit, Income Support, Jobseeker’s Allowance and Income-Related Employment and Support Allowance – are all being phased out.
All claimants will then be moved to Universal Credit by the end of April 2025.
The report, went on to say: “Pensioners currently in receipt of Child Tax Credit would lose their entitlement to transitional protection should they migrate to Pension Credit.”
If you are not claiming Tax Credits and are worried about energy bills this winter then you should consider applying for Penson Credit.
The support tops up your weekly income to £218.15 if you are single or to £332.95 if you have a partner.
It will also give you access to the Winter Fuel Payment, which is a one-off payment of £300 to help with energy costs over the winter.
Will I be better off on Universal Credit?
AROUND 1.4million people on legacy benefits will be better off after switching to Universal Credit, according to the government.
A further 300,000 would see no change in payments, while around 900,000 will be worse off under Universal Credit.
Of these, around 600,000 are expected to get top-up payments if they move under managed migration, so they don’t lose out on cash immediately.
The majority of those – around 400,000 – are claiming employment support allowance (ESA).
Around 100,000 are on tax credits while fewer than 50,000 each on other legacy benefits are expected to be affected.
Examples of those who may be entitled to less on Universal Credit according to the government include:
- Households getting ESA who and the severe disability premium and enhanced disability premium
- Households with the lower disabled child addition on legacy benefits
- Self-employed households who are subject to the Minimum Income Floor after the 12 month grace period has ended
- In-work households that worked a specific number of hours (e.g. lone parent working 16 hours claiming working tax credits
- Households receiving tax credits with savings of more than £6,000 (and up to £16,000)
But if they don’t switch in the future, they’ll risk missing out on any future increase to benefits and see payments frozen.
Those who move voluntarily and are worse off won’t get these top-up payments and could lose cash.
Those who miss the deadline and later make a claim may also not get this transitional protection either.
The clock starts ticking on the three-month countdown from the date of the first letter, and reminders are sent via post and text message.
There is a one-month grace period after this, during which any claim to Universal Credit is backdated, and transitional protection can still be awarded.
What can you get on pension credit?
If you live with a partner and you are both State Pension age then your weekly income must fall below around £350.
However, if your income is slightly higher, you might still be eligible for Pension Credit if you have a disability, you care for someone, you have savings or you have housing costs.
You could get an extra £81.50 a week if you have a disability or claim any of the following:
- Attendance allowance
- The middle or highest rate from the care component of disability living allowance (DLA)
- The daily living component of personal independence payment (PIP)
- Armed forces independence payment
- The daily living component of adult disability payment (ADP) at the standard or enhanced rate.
You could get the “savings credit” part of pension credit if both of the following apply:
- You reached State Pension age before April 6, 2016
- You saved some money for retirement, for example, a personal or workplace pension
This part of Pension Credit is worth £17.01 for single people or £19.04 for couples.
Pension Credit opens the door to other support, including housing benefits, cost of living payments, council tax reductions and the Winter Fuel Payment.
Claims for Pension Credit also open doors to a number of freebies and discounts.
For example, Pension Credit claimants over 75 qualify for a free TV licence worth up to £169.50 a year.
Claims for the benefit also provide eligibility to £25 a week cold weather payments and the £150 warm home discount.
Help with managed migration
Anyone moving from tax credits to Universal Credit can find help in a number of ways.
You can visit your local Jobcentre by searching at find-your-nearest-jobcentre.dwp.gov.uk/.
There’s also a free service called Help to Claim from Citizen’s Advice:
- England: 0800 144 8 444
- Scotland: 0800 023 2581
- Wales: 08000 241 220
You can also get help online from advisers at citizensadvice.org.uk/about-us/contact-us/contact-us/help-to-claim/.