Pensioners get credit for saving

NOW here's a novel idea. For the first time, pensioners who had the foresight to put a little aside for their retirement over and above their pension are to rewarded for it.

From next month, they will be eligible to claim the new Pension Credit - which could see them receiving as much as £14.79 a week extra.

What's new about it is that, provided your income does not rise above £139 a week for a single pensioner, those with savings could actually receive more than those without as a "reward" for doing the right thing and saving.

"Pension Credit is good news for our country's older people," the Secretary of State for Work and Pensions, Andrew Smith, said. "For the first time ever the Government will reward pensioners for saving towards their retirement."

On average, the Government claims, pensioner households will be better off by an extra £400 a year. Nobody will be worse off - while single pensioners could get up to £14.79 a week extra, and retired couples up to £19.20 a week more. So it has to be good news. Hasn't it? Those who get the extra cash will undoubtedly welcome it. But some pensioners' groups are warning the system is confusing and overly complex - and will involve means-testing, something pensioners have always hated. Plus there is a real likelihood many pensioners who might be eligible simply won't claim it.

James Player, of Age Concern York, welcomed the extra cash. "At the end of the day, pensioners are overall going to be gainers," he said.

But he added there had been so many changes in the way pensioners on low incomes were supported that another was bound to be confusing for many. Means-testing was also seen as intrusive and bewildering, he added - so there was a real possibility many pensioners might not try to claim their entitlement.

The real answer to solving pensioner poverty was not a new credit, he said, but a higher basic state pension.

Sadly, however, unless there is a change of heart by the Government, pensioners will for now have to make do with the new Pension Credit. So what is it - and how do you claim it?

The new credit system comes in two parts. One element, the credit guarantee, replaces the old Minimum Income Guarantee, which at the moment guarantees anyone aged 60 and over an income of at least £102.10 each week if single, £155.80 a week if with a partner.

This minimum guarantee will continue under the new system. In addition, there will also be a new top-up credit, the savings credit, for pensioners aged over 65 who have built up small savings and second or private pensions. It is this that could mean some pensioners receiving more.

Those eligible to claim the new credit include single people aged over 65 whose weekly income is less than £139.10, and couples, one at least of whom is over 65, whose total weekly income is less than £203.80. Pensioners who are disabled, or who look after someone who is disabled, may be able to claim even if their income rises above this level. People aged over 60 but under 65, meanwhile, may also be eligible to claim if their weekly income is under £102.10 for single people, or £155.80 for couples.

The new system comes into force from October 6. Pensioners already receiving the Minimum Income Guarantee, says the Department for Work and Pensions, need do nothing. They will automatically be transferred to the new Pension Credit system by October 6, and the department will work out their entitlement.

Pensioners not already receiving the Minimum Income Guarantee will be contacted by post before June 2004, inviting them to make an application. Those who do and who are eligible for Pension Credit will have their payments backdated to October 6.

Trying to work out just how much you might be entitled to won't be easy, however. The formula is so complicated the Department for Work and Pensions does not even try to explain it in its leaflet The New Pension Credit. So most people will just have to rely on civil servants getting their calculations right.

Claiming the money, however, could not be easier, the department insists. Simply call the freephone Pension Credit hotline - 0800 99 1234 - and a trained member of staff will take your details over the telephone, fill in a form for you, and send it to you for signing. All you need do is check it, sign it and return it.

You may, however, also have to send off documentation, such as share certificates or savings books, as proof of your savings - though you will only need to do this once every five years, a spokesman stresses.

The main problem might be getting through on that freephone hotline. It is going to be busy. That's partly why the Government is giving people until next year to apply. Extra staff have also been recruited to man the telephones. "We have spare capacity to deal with busy periods," a spokesman insisted.

Clearly, however, they are ready for some problems. Arrangements are being made to call people back at busy times. And if the lines get too busy, callers will simply get the engaged tone, the spokesman said. "At least then, you don't have people hanging on the phone for ever and a day," he pointed out.

To make a claim for Pension Credit, phone 0800 99 1234. Before you call, make sure you have the following things ready:

your National Insurance number

information about any money you have coming in

information about any savings and investments you have.

Updated: 08:59 Thursday, September 25, 2003