Low-income retirees urged to claim pension credit and unlock £301 cost-of-living payment

Tom Selby
3 May 2023
  • Low-income pensioners who might be entitled to pension credit are being urged to make a claim ahead of an upcoming government deadline
  • A successful pension credit application made by 19 May 2023 could qualify someone for a £301 cost-of-living support payment
  • This is because pension credit claims can be backdated up to three months, provided the relevant entitlement conditions are met during that period
  • Anyone entitled to pension credit between 26 January and 25 February 2023 will qualify for the cost-of-living payment
  • The average pension credit payment is worth over £3,500 a year, according to the DWP – but hundreds of thousands fail to make a claim for the benefit each year
  • Someone that fails to claim could have missed out on nearly £1,000 in cost-of-living payments alone already – £650 they could have received last year and now another £301

Tom Selby, head of retirement policy at AJ Bell, comments:

“Pension credit is massively underclaimed in the UK, with the government estimating 850,000 eligible pensioners fail to make a claim for the benefit each year. The average pension credit payment is worth over £3,500 a year, according to the DWP – a vital boost for low-income retirees during normal times but even more important with inflation continuing to eat away at household budgets.

“Pension credit is not just a valuable benefit in its own right – it also acts as a gateway to other benefits, such as help with heating costs and free TV licenses. And there is an extra incentive for pensioners to make a pension credit claim by 19 May this year. A successful pension credit claim made by this date also triggers valuable cost-of-living payments, the latest of which is worth £301 to those who are eligible.

“Pension credit claims can be backdated by up to three months, meaning 19 May is the last opportunity to trigger the £301 cost-of-living payment for the period 26 January to 25 February. You only need to be eligible for pension credit for one day during that period in order to qualify for the full £301 payment.

“But receiving the pension credit you are owed and the attached benefits, including the cost-of-living payment, won’t happen automatically – it’s up to you to make a claim if you think you are eligible. You can check your eligibility to claim pension credit online, over the phone or by post. If you are unsure how to go about completing your application, organisations like Age UK and Citizens Advice can help.”

Pension credit explained

Pension credit is a key benefit provided by the state which often tends to go unclaimed by lower income retirees.

In 2023/24, if you are over state pension age (66), single and your income is less than £201.05 a week then pension credit will top you up to that amount. For a couple, the combined income figure is £306.85.

In relation to pension credit, your income includes your state pension, other pensions, employment or self-employment earnings and most social security benefits. As with the state pension, it is up to you to claim pension credit.

For those who are entitled to receive it, claiming pension credit is also really important because it acts as a gateway to other benefits, such as help with heating costs, housing benefit, dental treatment and free TV licenses (if you are aged 75 or over).

In addition, those who claim pension credit currently qualify for cost-of-living payments from the government. To be eligible for the latest cost-of-living payment, which is worth £301, you need to have been entitled to pension credit between 26 January and 25 February 2023.

Tom Selby
Director of Public Policy

Tom is director of public policy at AJ Bell. He is a prominent spokesperson on retirement issues and his views are regularly sought by national print and broadcast media. Tom has successfully campaigned for a number of consumer-focused reforms, including banning pensions cold-calling and increasing pensions allowances, and he is passionate about improving outcomes for savers and retirees. Tom joined AJ Bell as senior analyst in April 2016, having previously spent seven years as a financial journalist. He has a degree in Economics from Newcastle University.

Contact details

Mobile: 07702 858 234
Email: tom.selby@ajbell.co.uk

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