Pension Credit: common mistakes that cost claimants thousands

The most common mistake is assuming you are not eligible. Many pensioners assume that because they own their home, have savings, or receive a decent occupational pension, they will not qualify. In reality, Pension Credit has a savings element and income element, and eligibility depends on a means test that accounts for both. A homeowner with a modest occupational pension and some savings can still qualify for a reduced Pension Credit amount. The savings element has been largely abolished for new claims, but some income-based assessment remains. The single biggest barrier to claiming is not trying — if you are over State Pension age and on a low income, it is always worth applying. There is no downside to making a claim, and the application takes approximately 20-30 minutes over the phone.

Pension Credit counts most income in the means test, but some income is treated more favourably than others. Key areas where errors occur: attendance allowance, disability living allowance, and personal independence payment are not counted as income; some occupational pension contributions are deducted; and the first £10,000 of savings is ignored (above that, £1 a week of income is assumed for every £500). Many claimants incorrectly include Attendance Allowance or PIP in their income calculation, leading to an underclaim. Others fail to declare occupational pension contributions that reduce their assessed income. Keep detailed records of all your income sources and check which are counted and which are disregarded using the Gov.uk Pension Credit eligibility checker before applying.

Pension Credit can be backdated for up to three months, but only if you were entitled to the benefit during that period. This means if you delay making a claim, you may lose up to three months of backdated payments. Many pensioners who hear about Pension Credit eligibility after a conversation with an adviser or relative delay making the claim, not realising the backdating window is limited to three months. Make your claim as soon as possible after becoming aware of your potential entitlement. Claims can be made by phone (0800 99 1234), post, or online. The phone claim is often the quickest and most straightforward option, with advisers on hand to help you through the process.