Pension Credit Law Centre NI October 2009

Pension Credit Two Elements  Guarantee credit  Savings credit

Guarantee Credit  aged over 60  living in Great Britain  habitually resident in Great Britain  right to reside  not subject to immigration rules

Calculating Guarantee Credit  appropriate minimum guarantee  total income  compare

Appropriate Minimum Guarantee Standard minimum guarantee Single£ Couple£198.45

Additional amounts Severe disability Single£52.85 Couple one qualifies£52.85 Couple both qualify£ Carer Single£29.50 Couple one qualifies£29.50 Couple both qualify£59.00 Appropriate Minimum Guarantee

Housing costs Eligible housing costs  mortgage interest  interest on loans for repairs and improvements  ground rent  service charges Must be  liable to meet the housing costs  dwelling normally occupied by person claiming  limited to £100,000 or £200,000 (but may claim a transitional amount)

Non-dependent reductions Gross incomeweekly deduction £382 or more£47.75 £306 - £381.99£43.50 £231 - £305.99£38.20 £178 - £230.99£23.35 £120 - £177.99£17.00 Less than £120£ 7.40

No non-dependent deductions for non-dependent who is:  Under 20 for whom person, partner is “responsible”  16 or 17 years old  under 25 in receipt of Income Support or JSA (IB), or C/ESA or IR ESA assessment phase  full-time student  receiving Work-based Learning for Young People Allowance  temporarily absent from home for more than 52 weeks  co-owner or joint tenant  normally residing elsewhere  in receipt of Pension Credit

 in receipt of DLA or Attendance Allowance  registered blind or treated as registered blind No non-dependent deductions where person claiming or partner is:

Income Earnings Net earnings = gross minus tax minus National Insurance minus half of any pension contribution

Earnings cont… Earnings Disregard £20 where a person or partner:  is a lone parent  is a part-time fire fighter, auxiliary coastguard, part-time crew of lifeboat or member of T.A., part-time RIR or part-time PSNI  is entitled to a Carers additional amount  in receipt of IB, SDA, DLA, Attendance Allowance, mobility supplement, disability or severe disability element of WTC  in certain circumstances has previously had a £20 disregard

Earnings cont… Others  Couple£10  Single£5

Benefits and Tax Credits Ignore  DLA  Attendance Allowance  Constant Attendance Allowance or Exceptionally SDA  Child special allowance  Guardians Allowance  increases in benefits for children  Social Fund payments  Child Benefit  Christmas bonus  Child Tax Credit  Housing Benefit  Bereavement Payments

Disregard £10  War Disablement Pension  War Widow(er)’s or surviving civil partner’s Pension  pensions paid as result of death or disablement of member of the services  compensation for non-payment of War Pensions  Similar pensions paid by other countries  Pensions paid to victims of Nazi persecution  Widowed Parents and Widowed Mothers Allowance

Count in full  Retirement Pension  Shared additional pension  Graduated Retirement Pension  Occupational and personal pensions  Income from overseas arrangement, retirement annuity contract, annuities or insurance policies  Working Tax Credit  Payment made under the Financial Assistance Scheme

Other income Maintenance – count in full Letting Rent from properties – capital Rent from own home – up to £20 Disregard Board and Lodgings Disregard up to £20 – half remaining balance counts as income Equity Release Regular payments – count in full Irregular lump sums - capital

Capital No upper capital limit Capital below £6,000 is ignored  £10,000 if in care  £10,000 for all from 2 nd November 2009 Income from capital £1 for every £500 or part of £500 over £6,000/£10,000

Assessed Income Period Retirement provision defined as:  Retirement Pension income  Income from annuity contracts  Income from capital

Assessed Income Period  Over 65 (partner over 60) –remains the same for 5 years (or 7 if transferred from Income Support on 6 October 2003)  Over 75 (partner over 60) –remains the same indefinitely

Guarantee Credit Appropriate minimum guarantee Minus Income Equals Guarantee Credit

Example 1 Ms B is single, age 74, lives alone in private rented accommodation. Her only income is her retirement pension of £95.25 and Attendance Allowance

Example 1 cont… Guarantee credit Standard minimum guarantee£ Additional amount: severe disability£ Appropriate minimum guarantee£ Income: retirement pension £ Appropriate minimum guarantee£ Less income£ Guarantee Credit£  Mrs B is entitled to a guarantee credit of £87.60

Savings Credit Aged 65 or over or have a partner who is 65 or over Can be paid in addition to guarantee credit or in its own right

Calculating Savings Credit Six Steps  Calculate income  Calculate appropriate minimum guarantee  Calculate qualifying income  Select savings credit threshold  Compare qualifying income and threshold  Compare income with appropriate minimum guarantee

Steps 1 and 2  Step 1 Calculate income – same as for guarantee credit  Step 2 Calculate appropriate minimum guarantee – same as for guarantee credit

Step 3  Calculate qualifying income – Income from Step 1 minus any: –Working Tax Credit –Incapacity Benefit –JSA (C) –SDA –Maternity Allowance –Maintenance –ESA (C)

Step 4 Select threshold  Single £  Couple £153.40

Step 5 Calculate maximum savings credit by comparing qualifying income and threshold  Less than threshold no entitlement  More than threshold calculate 60% of the difference Maximum Savings Credit –Single£20.40 –Couple£27.03  If the 60% is above the maximum then it is capped at maximum

Step 6 Compare income to appropriate minimum guarantee  Income less than appropriate income guarantee entitlement is the amount calculated at Step 5  Income more than appropriate income guarantee calculate 40% of difference  Deduct from amount calculated at Step 5 to get entitlement to savings credit  If 40% is more than amount at step 5 then no entitlement to savings credit

Example 2 June is aged 72 and lives alone. Her income includes her state retirement pension of £95.75 and a private pension of £40.45 per week. She lives in rented accommodation.

Example 2 cont… Step 1: Calculate income Retirement pension£95.25 Private pension£40.45 Total(A on flowchart)£ Step 2: Calculate appropriate minimum guarantee Single (B on flowchart)£130.00

Example 2 cont… Step 3: Calculate qualifying income No exempt income therefore qualifying income is the same as her income (£135.70) (C on flowchart) Step 4: Select threshold (D) Single £96.00

Example 2 cont… Step 5: Compare qualifying income with savings credit threshold Qualifying income£ Savings credit threshold£ Excess£ % of £39.70 = £23.82 Higher than the maximum Savings Credit therefore capped at £20.40 (E)

Example 2 cont… Step 6: Compare income with appropriate minimum guarantee Income £ Appropriate minimum guarantee £ Excess £ 5.70 (F) Income more than minimum guarantee then calculate 40% of the excess

Example 2 cont… 40% of £5.70= £2.28 (G) To find out how much savings credit she is entitled to take the £2.28 from the figure calculated in step 5 Step 5 £20.40 (capped at maximum) Step 4 £ 2.28 Savings Credit£18.12

Passporting BenefitPassported Benefit Income Support Jobseekers Allowance (IB) Pension Credit (Guarantee Credit) IR ESA Free school meals Social Fund:  CCG –Budgeting Loans –Funeral Expenses –Maternity Expenses –Cold Weather Payments Health Benefits Housing Renovation Grants

Passporting BenefitPassported Benefit Pension Credit (Savings Credit) from SOCIAL FUND – as above Child Tax Credit Working Tax Credit Health Benefits Social Fund: –Funeral Expenses –Maternity Expenses Child Tax Credit and Working Tax Credit not in payment (gross income below £16,040 Free school meals Housing BenefitSocial Fund: –Funeral Expenses