Income for Pensioners

[Redwurzel]

Martin Lewis is saying those on Pension Credit can claim extra income of around £4,100, which effectively takes the state basic pension to around £15,500 a year. I know not all basic state pensioners claim pension credit when they could and they need to.

My gripe is that pensioners who have pensions worth more than £11,000 but less than £15,500 a year are actually worse off, because they can't claim pension credit. If they earn more than £12,570 they pay 20% income tax. They have contributed to a occupational pension and/or private pension and ended up with less income. The way it works at present is - don't contribute to a pension scheme/programme unless you can get a significant pension out of it, say £10k a year.

 

[ThePrisoner]

How does pension credit work? Not familiar with benefits system.

 

[Colgates_shaving_foam]

If you knew that you were going to be worse off because you had some small private pension could you not draw down your private pension as cash and then spend all that on doing your house up for example, then you would qualify for the pension credit?

Or do they check for that?

 

[Boro_Interlinked]

Pension credit promises to top up your income to 201 quid a week (single person) if you qualify so they are saying is if your yearly income is low and you are a pensioner it can be topped up to 10500 a year
Martin is prob saying that PC is a gateway benefit giving you access to further things but it's not all income in cash , its discounts and small benefits like at local council , a possible discount on your council tax. Martin will have taken the best ideal qualifying person to come to that amount. ie over 75 years for a free TVlicence. So very few people will hit all those qualifiiers for Martin's ideal Pensionable Person and prob best to think that on average if someone put the effort in they may access just 2k in extra help
Therefore 10.5k add the extra 2k and they are still below the tax threshold of 12.57k and still just above the starting point of the other person in your comparison who gets a full state pension plus adds on whatever private pension income they have and gets taxed on anything above the threshold.
The overlap area will be tiny and it will nearly always be better to have full state pension plus private but be taxed.
I did my Dad's finances for the last 10 years of his time and his tax was usually amounted to £200 quid or so which one of his four private small pension schemes was instructed to remove from the payments. He got a FSP plus these little private amounts which I think just totalled near 3k a year

 

[Redwurzel]

Pension credit promises to top up your income to 201 quid a week (single person) if you qualify so they are saying is if your yearly income is low and you are a pensioner it can be topped up to 10500 a year
Martin is prob saying that PC is a gateway benefit giving you access to further things but it's not all income in cash , its discounts and small benefits like at local council , a possible discount on your council tax. Martin will have taken the best ideal qualifying person to come to that amount. ie over 75 years for a free TVlicence. So very few people will hit all those qualifiiers for Martin's ideal Pensionable Person and prob best to think that on average if someone put the effort in they may access just 2k in extra help
Therefore 10.5k add the extra 2k and they are still below the tax threshold of 12.57k and still just above the starting point of the other person in your comparison who gets a full state pension plus adds on whatever private pension income they have and gets taxed on anything above the threshold.
The overlap area will be tiny and it will nearly always be better to have full state pension plus private but be taxed.
I did my Dad's finances for the last 10 years of his time and his tax was usually amounted to £200 quid or so which one of his four private small pension schemes was instructed to remove from the payments. He got a FSP plus these little private amounts which I think just totalled near 3k a year

BI - I think its more like £220 per week now. yes it is a gateway to other benefits a major one is now help with energy bills. The window used to be smaller but what I have noticed it has got bigger recently. My mam is affected, she can't get the gateway benefits because her income is around £240 per week, while others who did save for a small private pension are better off if they claim the gateway benefits, say their income is equivalent of £300 per week i.e they are 25% better off.

 

[Boro_Interlinked]

BI - I think its more like £220 per week now. yes it is a gateway to other benefits a major one is now help with energy bills. The window used to be smaller but what I have noticed it has got bigger recently. My mam is affected, she can't get the gateway benefits because her income is around £240 per week, while others who did save for a small private pension are better off if they claim the gateway benefits, say their income is equivalent of £300 per week i.e they are 25% better off.

PC is in 2 parts. the first part is easy and takes a person up to 201pw. The second part is called savings part but its actually an assessment of both savings and income and can be worth another 18pw. Most claimants wont get all that 18