PENSION CREDIT CHANGE BOOSTS HOUSEHOLD INCOME

FIRST PUBLISHED BY: THE GUARDIAN

MORE THAN 500,000 PENSIONER HOUSEHOLDS WILL BE BETTER OFF AS NEW SAVINGS LIMIT PROVIDES BENEFIT BOOST

Pensioners are set to receive a small boost to their incomes. Hundreds of thousands of pensioners with small amounts of savings could have their income boosted following a change to benefit rules implemented today. An estimated 540,000 pensioner households will see their income rise by an average of £4 a week because the government has increased the amount of savings they are allowed to hold without having their pension credit entitlement reduced.

The pension credit tops up the income of those aged 60 or over who are living on a low income – up to £130 if you are single or £198.45 if you have a partner (these limits may differ if you are a carer or are disabled, or have certain housing costs). When the Department for Work and Pensions checks a person's entitlement to pension credit it takes their savings into consideration when calculating how much money they are due.

Until now the first £6,000 of savings was disregarded, then every £500 of savings above that threshold was assumed to produce £1 of income and the pension credit tapered accordingly. The basic guarantee part of pension credit entitlement is reduced in line with any assumed income earnings on a £1 for £1 basis, but the taper varies according to which other benefits you claim.

But the threshold has now been raised to £10,000, meaning pensioners with savings could get up to £8 a week extra (£1 for every £500 increase in the threshold). Some people with savings of more than £6,000 who have previously just missed out on benefits might also be brought into entitlement by the change and will need to make a claim. The higher "capital disregard" will also apply to people aged 60 or above who receive Council Tax or housing benefit.

Age Concern and Help the Aged (the charities merged earlier this year but have not yet changed their name) welcomed the uplift to pensioners' incomes but pointed out that millions of older people are still missing out on the financial help they are entitled to through pension credit and other benefits. Andrew Harrop, head of policy at Age Concern and Help the Aged, said: "The changes to the way income from savings is worked out are good news for hundreds of thousands of older people who can certainly do with a small top-up to their weekly income.

"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. "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. Up to £5bn goes unclaimed by older people each year and one in three entitled pensioners aren't claiming pension credit."

The charity has called consistently for the government to introduce a system of paying older people their entitlements automatically, rather than relying on them to claim, and a pilot trial is planned. But in the meantime it urges people to check whether they could be entitled to benefits by using a simple benefits checker on its website or to call the Pension Service on 0800 99 1234.

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