THOUSANDS of households will be asked to move benefits in the coming months.
Refuse to do so, and you could miss out on £1,000s worth of cash to help with essential bills and the general cost of living.
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The government plans to move all two million claimants to Universal Credit (UC) or pension credit by the end of March 2025, under a process known as managed migration.
The process began in May last year after a successful pilot in July 2019.
Over two million people are still on old-style legacy benefits, but the government plans to move all of them onto Universal Credit or pension credit by March 2025.
Eligible households are being contacted via letters in the post which tell them how to make the move from tax credits to Universal Credit.
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Once you receive a letter, you have three months to move over, or you could lose your current benefits.
But the government has now confirmed when it will ask pensioners who can’t claim Universal Credit to make a move from tax credits to pension credit.
Pension Credit is extra money for those over the State Pension age and on a low income.
It tops up your income to a minimum of £201.35 a week if you live alone and £306.85 if you have a partner.
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Viscount Younger of Leckie said in a new written statement on Thursday, January 24: “From August, we will also contact those claiming tax credits who are over state pension age, with households being asked to apply for either Universal Credit or Pension Credit, depending on their circumstances.”
In most cases, individuals will be better off following a move from legacy benefits to Universal Credit.
But 300,000 could be worse off, and should not move until they are asked to so their payments are protected, or they could lose cash.
Where an individual’s Universal Credit or pension credit payment is lower than their legacy benefits entitlement, they will usually be entitled to a top-up payment known as Transitional Protection.
This means that their Universal Credit or pension credit entitlement will be the same as their legacy benefit entitlement at the point they move.
Pensioners can also freely move over to pension credit from tax credits at any time – but it is best to check before doing so as you won’t get Transitional Protection if you act without your managed migration letter.
An online benefits calculator can help you understand how your payments will change from the switch.
These are free and easy to use from charities such as Turn2Us and EntitledTo, and it’s also worth asking them for advice.
Who is eligible for pension credit?
It is available for people who are over the state pension age, and who live in England, Scotland or Wales.
This is currently rising to 66 for both men and women.
It used to be the case that couples, where one person was over state pension age, could claim, but new rules now mean that both people in a couple must be over retirement age to apply.
This means if you’re single and move in with a partner who is younger than the state pension age, you will stop being eligible.
But if you’re already receiving pension credit under the old system it won’t stop unless your circumstances change.
To qualify, you’ll need to have a weekly income of less than £201.05 for single people or £306.85 for couples.
Your income is worked out taking into account various elements including:
- Your state pension
- Any other pensions you have saved, for instance, workplace or private pension savings
- Most social security benefits, for example, carer’s allowance
- Any savings or investments worth over £10,000
- Earnings from a job
The calculation does not include:
- Attendance allowance
- Christmas bonus
- Disability living allowance
- Personal independence payment
- Housing benefit
- Council tax reduction
If your income is too high to get pension credit, you may still get some savings pension credit, so it’s worth checking.
How much can you get in pension credit?
There are two parts to the benefit and pensioners can be eligible for one or both parts – here are the current rates for the tax year:
- Guarantee credit – tops up your weekly income to a guaranteed minimum level. This is £201.05 a week if you’re single and £306.85 a week for married couples.
- Savings credit – provides extra money if you’ve saved money towards retirement. You can get an extra £15.94 a week for a single person or £17.84 a week for a married couple.
You may also get additional pension credit if you are disabled, have caring responsibilities or have to pay certain housing costs such as mortgage interest payments.
For instance, you can get either £61.88 a week or £72.31 per week for each child or young person you’re responsible for.
If you are disabled or care for someone who is disabled, you may get more.
For example, if you have a severe disability, you could get an extra £76.40 a week, or if you care for another adult, you could get an extra £42.75 a week.
It’s important to note that benefit payments will rise by 6.7% from April, in line with the Consumer Price Index (CPI) level of inflation for September 2023.
It means that pension credit payments will go up from £201.05 a week to £218.15 or for couples, from £306.85 to £332.95.
The savings credit portion will also increase from £15.94 a week to £17.01 or for couples, from £17.84 to £19.04.
How do I apply?
You can start your application up to four months before you reach state pension age.
Applications for pension credit can be made on the government website or by ringing the pension credit claim line on 0800 99 1234.
You can get a friend or family member to ring for you, but you’ll need to be with them when they do.
You’ll need the following information about you and your partner if you have one:
- National Insurance number
- Information about any income, savings and investments you have
- Information about your income, savings and investments on the date you want to backdate your application to (usually 3 months ago or the date you reached state pension age)
If you claim after you reach pension age, you can backdate your claim for up to three months.
How will I be paid?
Your benefits are usually paid into an account, for instance, a bank account.
They’re usually paid every four weeks.
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You’ll be asked for your bank, building society or credit union account details when you claim.
But if you have problems opening or managing an account, you might be able to claim a different way.
