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Last Updated: Thursday, 11 September, 2003, 12:53 GMT 13:53 UK
In care, out of pocket
The government says its new Pension Credit will leave millions of pensioners better off.

But there are fears that people living in care homes might not be among them.

And this is far from the first complaint about the new credit, which comes into effect on 6 October.

The government has set out how it proposes to treat people in homes and has invited interested parties to pass on their comments.


But a decision is due in the next day or two, and lobby groups are worried that they will find they have been ignored.

There are two elements to the credit, a minimum income guarantee and an additional payment which rewards people according to their savings.

Under the first part, pensioners will be guaranteed a means-tested sum of 102.10.

The reward element could see them getting up to 14.79 on top of the guaranteed portion, or 19.20 for couple.

But care home residents are in a different position.

Personal costs

Their fees are paid by the local authority and from their own income.

That means they could be left with a minimum of just 17.50 to cover their personal costs such as clothing.

Then under the Pension Credit, if they have savings, they'll get up to 4.50 extra - couples will get up to 6.75.

There's over 80,000 people here who will not see the benefit of the government's promises.
Neil Churchill, Age Concern
But there's concern from pressure groups that if the government thinks people in care homes should get rewarded for saving, they should get the full amount - not up to 10 less.

"The Pension Credit has been brought in to reward people who saved modest amounts in their working lives, to enjoy that sum in retirement," says Age Concern's Neil Churchill.

"The problem here is that people in residential care will not enjoy the money they put aside during their working lives; they will not be rewarded for having saved that.

"What they will find is that although the government will give them Pension Credit with one hand, local authorities will take away with the other a large amount of that sum in charges."

Neil adds: "There's over 80,000 people here who will not see the benefit of the government's promises."

Means testing is used to calculate how much people should pay for their care in a residential home:

  • If they have saved more than 19,500 they pay for the lot.
  • If they have between 12,000 and 19,500, they contribute from both their savings and their income.
  • Under 12,000 in savings and they contribute from their income but not from their savings.

    A criticism of this system, is that there is little incentive for people to save for their retirement.

    The Pension Credit was designed to go some way towards redressing that.

    But people in care might still find their savings go largely unrewarded.

    Another credit - another fiasco?
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    29 Aug 03  |  Working Lunch
    Pensioners stumped by savings rule
    28 Aug 03  |  Working Lunch
    More credit misery looming?
    15 Jul 03  |  Working Lunch
    Countdown to Pension Credit
    07 May 03  |  Working Lunch

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