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Last Updated: Friday, 3 October 2003, 10:22 GMT 11:22 UK
Ditch pride and claim the credit
Malcolm McLean
Chief executive of the Pensions Advisory Service

Malcolm McLean
Malcolm McLean is urging pensioners to claim

Pride, fear and ignorance may put off people claiming the new Pension Credit, but it shouldn't stop them from claiming their money, writes Malcolm McLean, a leading pensions expert.

More than half the pensioner population or 11m people might qualify for Pension Credit.

It is a new means-tested state benefit being introduced from 6 October 2003 to replace and extend the Minimum Income Guarantee.

It is a fact that elderly people don't like means-tested benefits and are reluctant to claim them, due to a combination of pride, fear and ignorance.

This all acts as a barrier to financial help reaching the people who need it most.

Given a choice, I suspect the majority of pensioners in this country would prefer to see the extra government money being put into Pension Credit used to fund an increase, however small, in the basic state pension.

Pension Credit is an entitlement, not a handout or a form of charity
Malcolm McLean

It is a matter of pride.

People see the basic pension as something they have earned through national insurance contributions.

Means-tested benefits still have the stigma of public assistance and the old poor law - a handout that has not been earned.

But whilst I understand that attitude, this really should not be allowed to cloud the issue - and pension credit is an entitlement, not a handout or a form of charity.

It is the government's preferred way of getting extra help to pensioners and for the moment, at least, this has to be the way forward.

The means test itself is a fairly gentle one - and it involves you providing details of your income and savings on a form, which can be completed for you.

You merely have to sign it as correct.

It is no different than filling out an income tax return which most people have no choice about doing anyway.

Because of its apparent complexity, Pension Credit will be a massive turn-off for many people.

So the message is: Don't let pride stand in your way. Claim your Pension Credit and accept that any extra money you receive is yours as a right.

Most complex benefit

The rules of Pension Credit represent a considerable advance on other means-tested benefits, as the vast majority of pensioners will not have notify changes in their financial circumstances for five years.

Your claim is confidential and there are a number of payment options for receiving the money.

You can get the money with your state pension, at a post office or into your personal bank account.

Because of its apparent complexity, Pension Credit will be a massive turn-off for many people.

As presented, it is certainly the most complex benefit that I can recall being introduced in the last decade.

It would not surprise me, therefore if for that reason alone everyone who should be claiming it will fail to do so.

And yet it is a fairly simple concept - that if you are 60 or above and your income falls below a minimum level you are entitled to claim a top-up to bring you up to that level.

Another welcome feature of the Pension Credit is that people aged 65 and over are entitled to get a bit extra on top of this if they have saved for their old age and not simply relied on the state pension.

What income qualifies?

All very sensible but the devil really is in the detail.

I can see that people are going to be totally confused by a number of things, not least what does and does not count as income.

It is certainly the most complex benefit that I can recall being introduced in the last decade.

Some income is taken fully into account in working out the level of the top-up - pension and certain social security benefits, such as Carer's Allowance and Bereavement Benefit.

Income from savings above 6,000 is taken into account not as the actual income but on the basis of an assumed rate.

They assume a pensioner is earning income of 1 for every 500 saved, after the first 6,000 of savings which are automatically discounted.

This means the government will assume someone who has 10,000 worth of savings should be earning income from their savings of 8 a week as part of the credit's calculation.

One confusing aspect of the credit is that even if you have income above the minimum threshold, you may still qualify for some extra help.

The government is saying that it will guarantee a single person at least an income of 102.10 a week or 155.80 a week, if they are a couple.

But some pensioners who already receive more than these amounts, could still qualify for help under the credit.

This is because some forms of income are ignored when it is calculated.

Attendance Allowance, Disability Allowance, Housing Benefit and Council Tax Benefit are among the types of income that are not counted when the credit is calculated.

You have nothing to lose by putting in a claim and possibly more than you realise to gain by doing so

Some income is taken into account in part only.

For example the first 5 per week of earnings for a single person is ignored, the first 10 for a couple and the first 20 in certain other situations.

The first 20 a week of rent from a sub-tenant is ignored.

If you have a lodger, not only is the first 20 disregarded but also 50% of the balance of payment from each boarder where meals are provided.

One other major change from the Minimum Income Guarantee rules - the existing top-up system - is that all "charitable payments", for example, from a son or a daughter, are ignored in full.

Claim the credit

How the public is supposed to either know or understand all this is not clear.

I would therefore say to anyone aged 60 or above who considers themselves to be of modest means should put in a claim.

Don't be too ready to assume you don't qualify - you might do.

You have nothing to lose by putting in a claim and possibly more than you realise to gain by doing so."

How to claim?

To make a claim for Pension Credit, call 0800 99 1234.

If you are already receiving the Minimum Income Guarantee there is no need to do anything. Your claim will be assessed automatically.

Claims for Pension Credit made before October 2004 can be backdated to the start of the scheme on 6 October 2003 or to the date of entitlement, if later.


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