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Pension Credit

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.

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Pension Credit

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  1. Pension Credit Law Centre NI October 2009

  2. Pension Credit Two Elements • Guarantee credit • Savings credit

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

  4. Calculating Guarantee Credit • appropriate minimum guarantee • total income • compare

  5. Appropriate Minimum Guarantee Standard minimum guarantee Single £130.00 Couple £198.45

  6. Appropriate Minimum Guarantee Additional amounts Severe disability Single £52.85 Couple one qualifies £52.85 Couple both qualify £105.70 Carer Single £29.50 Couple one qualifies £29.50 Couple both qualify £59.00

  7. 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)

  8. Non-dependent reductions Gross income weekly 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

  9. 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

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

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

  12. 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

  13. Earnings cont… Others • Couple £10 • Single £5

  14. 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

  15. 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

  16. 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

  17. 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

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

  19. Assessed Income Period Retirement provision defined as: • Retirement Pension income • Income from annuity contracts • Income from capital

  20. 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

  21. Guarantee Credit Appropriate minimum guarantee Minus Income Equals Guarantee Credit

  22. 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

  23. Example 1 cont… Guarantee credit Standard minimum guarantee £130.00 Additional amount: severe disability £ 52.85 Appropriate minimum guarantee £182.85 Income: retirement pension £ 95.25 Appropriate minimum guarantee £182.85 Less income £ 95.25 Guarantee Credit £ 87.60 • Mrs B is entitled to a guarantee credit of £87.60

  24. 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

  25. 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

  26. Steps 1 and 2 • Step 1 Calculate income – same as for guarantee credit • Step 2 Calculate appropriate minimum guarantee – same as for guarantee credit

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

  28. Step 4 Select threshold • Single £ 96.00 • Couple £153.40

  29. Step 5 Calculate maximum savings credit by comparing qualifying income and threshold • Lessthan threshold no entitlement • Morethan 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

  30. 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

  31. 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.

  32. Example 2 cont… Step 1: Calculate income Retirement pension £95.25 Private pension £40.45 Total (A on flowchart)£135.70 Step 2: Calculate appropriate minimum guarantee Single (B on flowchart) £130.00

  33. 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

  34. Example 2 cont… Step 5: Compare qualifying income with savings credit threshold Qualifying income £135.70 Savings credit threshold £ 96.00 Excess £ 39.70 60% of £39.70 = £23.82 Higher than the maximum Savings Credit therefore capped at £20.40 (E)

  35. Example 2 cont… Step 6: Compare income with appropriate minimum guarantee Income £135.70 Appropriate minimum guarantee £130.00 Excess £ 5.70 (F) Income more than minimum guarantee then calculate 40% of the excess

  36. 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

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