MARTIN Lewis has urged hundreds of thousands of pensioners to check if they can get a £3,500 income top-up.
The consumer champion shared the warning on his podcast this week, and also called for the cash to be automatic.
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Speaking on his latest episode of the BBC 5 Live show The Martin Lewis Podcast, Martin explained all you need to know about the pensions triple lock.
He also discussed the importance eligible pensioners signing up to Pension Credit.
Millions of people are set for a bumper rise of £901 to their state pension next year as the triple lock system is set to see payments go up by 8.5%.
That’s because the triple lock system sees the state pension rise in line with whatever is highest out of: wages for May to July, 2.5% or September’s inflation figures.
Growth in employees’ average total pay was 8.5% in the three months to July, putting it above the current rate of inflation at 6.8%.
It means, if inflation stays around where it is, pensioners on the new state pension could be looking at an extra £901 a year.
It’s important to note though that this is for those entitled to a “full” state pension, how much individuals get is based on the number of National Insurance credits you’ve accrued.
Speaking on the podcast Martin said: “What I find deeply frustrating is there are many people who don’t have the National Insurance credits who don’t get the full state pension.
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“And 800,000 household in the UK are eligible for a top-up called Pension Credit because they’re not earning enough to get the full state pension but are not claiming it.
He went on to say that many argue we should axe the triple lock because putting pensions up by as much as 8.5% is expensive.
He said: “Well, there’s an argument that says lots of wealthy people are getting this, why should everybody or the taxpayer be contributing to their huge uprating.
“I would say the most important thing is we stop the 800,000 people who aren’t claiming Pension Credit.
“We should work a lot harder and automate the fact that people who are due Pension Credit – those are the lowest income pensioners – get their Pension Credit, that should be our priority.”
The Money Saving Expert then detailed his “rule of thumb” who who is eligible for the cash payment.
He said: “If you’re listening to this please be an ambassador for helping the older members of our community get what they’re entitled to by claiming Pension Credit.
“If you are a single pensioner with total weekly income under roughly £220 or you’re a pensioner couple – both of pension age – with total weekly income under roughly £320, then you may be eligible for Pension Credit.”
The average Pension Credit award is worth over £3,500 a year and tops up a person’s income to a minimum of £201.05 per week for single pensioners and to £306.85 for couples.
Martin describes the cash payment as a “core gateway benefit” which opens the door to a whole host of other support.
This includes the remaining £600 extra cost of living payment, a free TV licence, council tax reductions worth thousands, the Warm Home Discount, Cold Weather Payment and potentially free NHS dental treatment.
Martin said: “When we’re talking about the policy of the State Pension, surely some form of automating, some form of better data collection to make sure that we proactively go to those 800,000 people and say ‘you are eligible for substantially more money’.
“And then maybe if we did that, the debate about the Triple Lock where much of the argument is about the terrible poverty out there among some pensioners would be a little easier because we’d be able to say we know the safety net is working.”
Below we explain who is eligible for Pension Credit and how you can get it.
Who is eligible for Pension Credit?
If you reached pension age after April 6 2016 and you have enough qualifying National Insurance years (a minimum of 35 years) it may be worth checking.
The boost is worth an average of £3,500 a year, Martin said.
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
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.
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 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.
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