Can you apply for pension credit? It’s key to help with rising energy costs

Energy prices are set to rise after the regulator announced the new price cap on Friday. From October, the annual gas and electricity bill for a typical household will go up to £1,717. But, while the winter fuel payment would have gone a long way to covering the increase in previous years, this time it will only be given to pensioners who receive pension credit.
About 880,000 people who could get that benefit do not do so – something the government is trying to address as it faces criticism for taking the winter fuel payment away from about 10 million pensioners.
Last week it launched a publicity campaign to encourage those who are missing out to apply.
It is a means-tested benefit to ensure pensioners receive at least a certain level of income each week – it tops up the difference between what they already get, and a set minimum.
For single people, standard pension credit will bring up their income to £218.15 a week, while for a pensioner couple it is £332.
Those who have caring responsibilities, or a disability, may be entitled to a higher guaranteed income: the severe disability addition is £81.50, while the carer’s addition is £45.60. Someone qualifying for the first of those will be ensured an income of at least £299.65 a week.
Homeowners who face costs such as ground rent or service charges – typically people living in flats – can claim an extra credit to help.
The gap between your income and the threshold does not have to be large: official figures show that the largest group of recipients are getting £20 or less a week to make up the difference. And beyond monetary value, it is worth applying because it unlocks a range of other benefits.
Steve Webb, a former pensions minister and now a partner at consultants LCP, says it is “vital gateway to other benefits such as the winter fuel payment, free TV licences for the over-75s, automatic help with electricity bills, extra money when it’s freezing and a host of other help”. This is true even if you only qualify for £1 a week in pension credit.
Joanna Elson, chief executive of the charity Independent Age, says it boosts people’s incomes by an average of almost £4,000 a year, while the other benefits it secures “can be worth up to £8,000 a year”.
You need to be of state pension age; for a couple, you both need to meet this requirement.
You need to prove that you earn less than the thresholds. The income taken into account includes any state pension, private pension, earnings from working and most benefits. There are some benefits that are not used in the calculations – these include attendance allowance, disability living allowance and housing benefit.
Your savings are also taken into account. If you have £10,000 or less you will get pension credit to take you all the way to the threshold; if you have more put by, your payment will be reduced.
For every £500 you have over £10,000, you will be considered to earn £1 a week. So if you have an income of £200 a week, and savings of £12,000, you will be treated as though your income is £204. Other assets you own – including your home, jewellery or car – will not be part of the calculations.
If you reached state pension age before 6 April 2016, and have your own retirement savings, you may also qualify for savings credit worth up to £17.01 for single people and £19.04 for couples.
It is not a straightforward benefit, so it can be hard to work out whether or not you can get it. But as Webb points out: “The good news is that you don’t have to work out whether or not you are entitled before you claim – they do all of that for you … if the answer is ‘no’ you haven’t really lost anything.”
“They” is the government’s Department for Work and Pensions, which administers the payments.
Elson says there are several barriers that could explain the low take-up. “Stigma unfortunately surrounds the social security system, and many older people have expressed shame, telling us they felt like a ‘beggar’ or a ‘failure’ when asking for help,” she says.
“Also, many people in later life often assume they are ineligible for pension credit, as there are misconceptions that homeowners, or those with savings, cannot apply, which is also not true.”
Webb says that if anyone feels they should not ask for help, he tells them that “just as they get a state pension because they’ve paid national insurance all their lives, they’ve also paid tax all their lives, and pension credit is funded out of taxation – so why not claim?”
You will need to get a few details in order before you can make a claim. You will need your national insurance number and details of your income, savings and investments.
Webb says anyone of pension age claiming help from their local council to pay rent or council tax will have “pretty much everything the DWP would need to assess you”.
With the information in hand, phone the DWP on 0800 99 1234 or apply online.
Or, if you want assistance, there are charities that will help you. Independent Age has a free helpline on 0800 319 6789 – its advisers can run a benefits check for you to see what financial support you could be entitled to.
Age UK offers a similar service. It’s advice line is 0800 678 1602 or you can find local help on its website.
You can start your application up to four months before you reach state pension age. If you leave it later, you can backdate your claim by up to three months.
To make sure you get this year’s winter fuel payment you need to apply for pension credit by 21 December.