Introduced by then-Prime Minster Gordon Brown, Pension Credit was created with the aim of improving the lives of some of the poorest elderly people in the UK.
Since being instated in 2003, it has been one of the most heavily edited pieces of legislation of the past few decades, and the administration of the scheme has proven to be still be a contentious issue today.
Pension Credit is split into two separate sections, with each serving a different purpose and demographic:
- Guarantee Credit is perhaps the most vital of the two payments, providing financial relief for those who have retired but have earnings (drawn from state and private pensions, as well as savings) that place them below the national poverty line. Generally, a person whose income is less than £132.60 per week – or £202.40 for a couple – are eligible for some form of payment.
- Savings Credit is the second section, and was created in order to reward elderly people who are not especially well off, but have saved enough to live relatively comfortably. Payments are inverse-means tested – i.e. the more a claimant has in their personal savings, the more they are eligible to claim. The limits and payments for this benefit have been hotly debated since the scheme’s introduction, and are both still subject to change.
Pension Credit is similar to any other welfare payment, in that it can affect any other financial relief earned from the Department for Work and Pensions, and is subject to the newly created annual benefit cap.