A look at how the magic roundabout of Pension Credit sums work in detail with the help of some examples and a summary of this series of five blogs on benefits, cancer and older age.
In the previous blog in this series of five looking at Benefits, cancer and older age, I looked at extra amounts for older people that may well apply after a cancer diagnosis in and the too often unclaimed Pension Credit in particular.
This time, I look at some examples of how the sums work for the main Pension Credit (Guarantee) in more detail. This involves sums not just for the sake of it and ignore the arithmetic but to see how PC can work in practise. To try and help us through that double maths on a Tuesday afternoon urge to doze off, I have recruited some fictional and familiar charcters all now facing scenarios familiar to people affected by cancer.
This blog may help you to check whether you are missing out on extra help within an existing Pension Credit claim or to see how you may now be entitled to PC for the first time, perhaps because of extra disability and carers additions that might now apply.
- How do Pension Credit sums work in detail?
Essentially, PC compares the money you have coming in with an “appropriate amount” set for your household, depending on whether or not you have a partner and whether or not you qualify for two extra additions, one for severe disability and one for being a carer. In future it is planned to add further amounts to replace Housing Benefit for rent and any Child Tax credit for any grand children living with you, but for the time being these remain separate benefits and claims.
1.1 The basic “appropriate amount"
These amounts include a standard amount for anyone which is £173.75 if you are single and £265.20 if you are a couple (at 2020/21 rates)
So, for example:
- Dylan has a full basic Retirement Pension of £134.25 a week and a small works pension paid at the equivalent of £19.50 a week. A weekly total income of £153.75. He applies for PC and gets £173.75 - £153.75 = £20.00 a week in Pension Credit.
And because he is on Pension Credit, he automatically qualifies for full help with any rent, council tax and health costs e.g. fares to hospital. He also spends a lot of time looking after his friend Ermintrude,
- Zebedee springs into the Centre and at first sight is not entitled to PC. As well as his full State Retirement pension of £134.25, he gets £83.45 a week in works pension from the Magic Roundabout Company and has £20,000 of life savings, which add a nominal £20 tariff income on to his income figure used in the PC sums.
At a total of £237.70, Zebedee seems well over the basic single “appropriate amount” for Pension Credit. And he has to pay all his rent and council tax too, so he is dipping into his savings to pay the bills. But we will come back to Zebedee after we have sorted out his Attendance Allowance :-) .
- Florence, 66 and Dougal 56 are a couple. Florence has built up a good works pension equivalent to £186.30 a week and a full State Retirement Pensions at £134.25. Dougal has long term mental health difficulties and gets Contributory Employment and Support Allowance of £113.55 a week and Personal Independence Payment Daily Living Component of £59.70 a week .
Their total income for PC purposes is £434.10, with Dougal’s PIP being ignored as income. They are though well over their basic PC amount of £265.20. Florence is used to managing Dougal, sweetly, and the household finances.
Florence has come into the Centre more for emotional support and to join in other activities after a recent diagnosis of breast cancer. They face extra costs, but Florence thinks they might manage. prudently, as long as she keeps Dougal's spending on a tight lead. But her Centre's Benefits Advisor grabs her from the Kitchen Table for a quick benefits check, with a glint in his eye :-)
- Dylan qualifies for PC at the moment with just the basic amounts, but for now Zebedee, Florence and Dougal don’t.
- But that look in the Advisor’s beady eye is all due to the power of PC additions, that may well benefit all four of them :-)
2 Additions to your Appropriate amount
As well as the basic amounts for a single person or a couple, there are currently two additions within the Pension Credit sums, both of which could potentially be relevant to people affected by cancer:
2.1 The Carers addition
The Carers Addition is worth an extra £37.50 a week and applies to anyone who either:
- receives the Carer's Allowance: or
- who has had one of those “it’s not you, it’s me” letters back from Carers Allowance mentioned in the last blog. These are the ones that say you do qualify for CA, but that they can't actually pay you anything because you are already receiving another "overlapping benefit"
And with most people claiming a State Retirement Pension, it’s more likely to be the latter they get back, rather than the one saying that they will actually receive the 67.25 in CA (with an additional amount to top it up to £74.35 in Scotland). Your Retirement Pension, then, would usually stop a Carers Allowance being paid, but you would still retain an “underlying entitlement” to that CA.
And that’s good enough for the PC carer’s addition. So that’s why your Advisor is going to suggest you apply for a benefit that s/he knows you are not going to get. It’s often best to humour them …
Both partners in a couple could be getting a carers addition, perhaps for looking out for each other
2.2 the severe disability addition
This is the big one, worth an extra £66.95 a week in the sums. This can apply to people who get a disability benefit (e.g. AA, DLA or PIP), but not to everyone who does so. There are some extra conditions just to complicate things...
To qualify for a severe disability addition:
- you must get the right disability benefit: either AA or its equivalent i.e. PIP Daily Living (either rate) or DLA Care (at middle or highest rate) - DLA and PIP Mobility or DLA Lowest Care won’t count ; and
- you must be counted as living alone - If you do then this is straightforward enough. But if you don't live alone you may still be counted as doing so, as some people who may be in your household can be ignored; and
- no one must be actually receiving Carers Allowance for looking after you
- For the first condition you need to be getting the relevant “disability benefit” . Either you do, you don't or your Advisor may have high hopes that you might, having just helped you make a claim for PIP or AA.
- For the second condition, it can be very straightforward if you do live alone. But other adults who may be in your household may be ignored - by Pension Credit not necessarily you - for the purposes of the addition. For example: under 18s, people staying temporarily who normally live elsewhere, people who also have a disability and people who are there on a commercial basis (whether they pay you rent as your lodgers or you pay them rent as your landlords)
- The third condition can often rest on the difference between a carer actually being paid Carers Allowance and merely making a claim for it. If a carer is actually paid the Carers Allowance then the severe disability addition stops. But if the carer only gets a PC "carer's addition" or a legacy benefit "carer's premium" , then the severe disability addition can carry on . But see UC below.
The overall effect of a claim for Carer's Allowance on both their income and the person they look after would be either:
- a straight swap: the person with cancer loses up to £66.95 a week, but the carer and the carer gets the full value of their £67.25 Carers Allowance (becoming £74.35 Carers Assistance in Scotland)
- a net loss. if the carer is on a means-tested benefit themselves (e.g. Income Support or Pension Credit), then they may well be paid the Carers Allowance. This is then taken away from their benefit £ for £, but they do get some of it back via a carers premium. The value to the carer - in that scenario - is only an extra £37.50 a week, but the person they care for loses up to £66.95
- But there’s a third happier "win-win outcome" from making a Carers Allowance claim :-) And this might be quite common in “pension age”.
This happy result occurs when a carer claims CA, but can’t actually be paid it because it overlaps with say a Retirement Pension or a Contributory ESA. The carer can still have a PC carers addition or a carer's premium in a "legacy benefit", and so is still £37.50 up on the deal.
But because Carers Allowance is not actually paid, then it does not get in the way of the £66.95 severe disability addition for the person they are caring for. Cakes are both had and eaten, and buns and pennies are held in the same hand … A carer's premium or carer's addition on its own does not block off a severe disability addition. Unfortunately the equivalent "carer's element" in Universal Credit does
It does seem complicated, but I hope this just about makes sense. If in doubt get advice first before claiming Carers Allowance.
Warning - Universal Credit can seriously damage your wealth:
The above happy third win-win situation relies on the carer having a benefit that blocks off the payment of Carers Allowance. Common enough for carers who have also come of pension age, but less so among younger carers. So , the the carer gets the benefit of a carers premium /addition for just having claimed Carers Allowance, but the fact they can't get the Carers Allowance means the person they care for can still get their severe disability addition addition in PC.
However, under Universal Credit, the similar “carers element” comes with key differences to carers premiums: one of these is that receipt of just the UC carers element can knock out entitlement to the severe disability addition. It will no longer be enough to just block off the Carers Allowance
2.3 Don’t miss out on the severe disability addition
A lot of people entitled to a severe disability addition don’t actually get it added on, as there is no reliable automatic mechanism for triggering the follow up form – called a PC10 – that is needed in order to have that extra addition included when someone on PC is awarded a disability benefit.
Meanwhile, it may not feel like common sense to be able to get more PC after your disposable income has just increased because of an award of AA, DLA or PIP. Many people are just glad that the extra disability benefit income is not taken away from their income, so the very idea of an increase seems impossible and so people don’t even think there is a question to ask.
And that can be all the more so, if you haven’t claimed PC before – or have applied but been correctly turned down in the past . You might not realise then – that by the power of additions – you have now become entitled to Pension Credit, when perhaps previously – with a lower income – you were not.
Meanwhile many Pension Service staff are not totally clear and will get mystified at the idea of someone being entitled to both carers and severe disability additions at the same time. But having read the last blog you so understand how that could be …
It may seem hard to make sense of, but it would be a shame after all that hard work getting your disability benefit sorted, if you were to miss out on an extra £64.30 - and sometimes far more - for the sake of a quick phone call, a short PC10 form which can often come down to two ticks and a signature :-).
And if you are thinking you may have been missing out all this time, then it can be sorted. One of my colleagues recently spotted an unpaid severe disability addition. Two quick ticks and the shake of a signature on the PC10 and a brief covering letter led to 5 years back pay of around £15,000 with interest …
3. What those additions can do to our case studies
Perhaps it’s easier if we apply these additions to our three magic roundabout households.
Dylan is already on PC, but that doesn’t stop the Advisor’s beady income maximising eye.
- “Let’s apply for a benefit we know you aren’t going to get “ she says, enthusiastically... “ Because of all the care and support you are giving Ermintrude"
- “Well if it makes you happy, man” said Dylan , doubtfully.
The result is that “Dear Dylan, it’s not you, it’s me ” letter from Carers Allowance. Dylan sends the letter to PC, dubiously and is delighted to get a carers addition adding £37.50 a week to his Pension Credit.
Zebedee can’t get PC at the moment, but following a diagnosis of cancer of the spring, his Advisor applies for Attendance Allowance. He is awarded the top rate of £89.15 as the cancer has affected his bounce after some aggressive chemo treatment with a maintenance dose of WD40 therapy. -
- “Well this is handy” say Zebedee gratefully, as it will save me drawing on me savings to pay the rent”
- “Just a minute”, says his advisor as she reaches for a Pension Credit claim form “By My Sums! You are now entitled to Pension Credit”
The extra income from Attendance Allowance doesn’t count in the PC sums, so Zebedee is treated as still having just his £204.30 a week in other income plus £20 because of his savings i.e. £224.30 a week. But as Zebedee lives alone and no one is getting Carers Allowance for helping him, he now qualifies for a severe disability addition. HIs PC amount goes up from £173.75 to £240.70, while his income has remained at £237.70. So, he now qualifies for £3.00 a week PC
- “Well, it may only be £3, but every little helps ” , says Zebedee, not too disappointedly
- “Ah, but now you are on PC, you are passported through the Housing Benefit savings limit and can now get all your rent and council tax covered” says his Advisor, beamingly. "That £3 is actually going to be worth more like £90 a week to you!"
- “Boinnngg!!!", says Zebedee.
3.3 Florence and Dougal
As things stood, Florence and Dougal could only get a carers addition added to their PC amount bringing their appropriate amount up to £302.70, which would still be a long way below their income of £434.10. So there seems little point in bothering to make that Care's Allowance claim . Although Dougal’s PIP is at the right rate for him to have a severe disability addition included, he does not live alone because Florence is in the house.
However, with Florence facing a rough year of cancer treatment, she could also apply for Attendance Allowance. And after a successful application, things change markedly in the PC sums. If they made a claim before 19th May 2019, they could have finally received Pension Credit. The sums are shown at current 2020/21 rates, to show how the sums would look this year :
- Each one of them is now ignored for the purposes of the other’s severe disability addition. So not only can Dougal now get the severe disability addition he was previously denied, but Florence can also have an addition for her added to their joint sums too.
- So, two lots of severe disability addition makes their PC applicable amount increase and a PC claim edged ever closer. But not quite - a basic £265.20 -at current rates- and two lots of severe disability addition @ £66.95 each, makes their current PC amount up to £399.10. Their income would still be £35 too high to receive any PC
- But then it was worth making was worth making those Carer’s Allowance claims. Not only for Florence for all years of putting up with Dougal, patiently, but also for Dougal who in his own way supports her through her time with cancer. Both of them had another benefit to block the actual payment of Carers Allowance. So, they each claimed CA, knowing that they wouldn't be paid it and so will not affect the other’s severe disability addition. The point of the flurry of additional paperwork to claim a Carers Allowance that neither could get, was is to add two carers additions to their PC appropriate amount.
- So, at current rates they were then entitled to both two cares additions (@ £37.50 each) and two severe disability additions (@66.95 each) on top of the basic £265.20 couple rate. This brought the amount up to the absolute PC maximum of £474.10.
- With neither Dougal’s previous PIP award, nor Florence’s new PIP award counting as income, PC still counted their joint assessed income as being £434.10. So this meant that , Florence and Dougal' income is below their PC “appropriate amount” and they are entitled to a top up of £40 a week from PC Guarantee Credit.
And with any award of PC Guarantee Credit, that means full help with council tax, rent and those worrying fares to hospital.
The mixed age couple effect.
This blog was first written before the mixed age couple changes, so I have just updated the sums as they would look now, had all the Pension Credit magic happened before May 2019. Although they had been a couple for many years, they were not receiving Pension Credit before all of the claims were sorted as above. They would then still be stuck, if they were doing all of this after that rule change.
However, if Florence and Dougal were just good friends now, claiming separately, when their eyes met across the Kitchen Table at the Magic Roundabout Maggie's centre, then the Benefits Advisor could still work the same magic, but only if he can persuade them not to rush in and move in together before Florence's AA and severe disability addition was sorted.
- For if a single Florence on Pension Credit moved in with a single Dougal on ESA, they wouldn't be able to claim Pension Credit, but they might be able to claim "legacy benefits" where the sums as a couple are very similar to be as near as makes no difference. as a couple on ESA.
- This only works if Florence has got her AA awarded and a new severe disability addition sorted in her PC and Dougal has a severe disability premium in his Income-related ESA. These amounts prevent them from claiming Universal credit - for now - and so they would claim Income-related ESA as a couple instead.
- And that ESA sum would be just the same as the PC one above except that additions are called premiums and the rather basic couple amount of ESA of only £116.80 is topped up to the £265.20 of Pension Credit by a "pensioner premium" of £148.40. The result is the same except they end up with £40 Income-related ESA rather than £40.00 Pension Credit
However if they had rashly rushed in before Florence's AA and severe disability addition was sorted, then they would have had to claim Universal Credit instead:
- UC does not have either a pensioner element nor any equivalents to the severe disability premium
- their maximum UC at a weekly equivalent would amount to £290.79 plus an amount for rent in their new cottage with rose's round the door. Nothing like £474.10 + Housing Benefit for the rent
- Their Advisor will be crossing fingers that they did not apply at that point, and wracking brains if they have
- Ok, OK, so how do I claim. I bet it’s complicated?
It can be a bit tedious and daft but not too complicated, especially with the help of one of our Benefits Advisors
- You can make a claim for Pension Credit on a paper form or by telephone. See the links below for the details.
- The form is relatively straightforward in plain English and some 12 short pages long
- PC claims can be backdated for up to 3 months. So, if you have missed out you can go back a little way.
- Or if you know you are only going to qualify after claiming a disability benefit, you have time to get that e.g. Attendance Allowance decision and still backdate PC to the start date of that disability benefit claim.
If your PC is hanging on a disability benefit claim
Sometimes though the answer comes back as a "No" from disability benefits. The general rule of thumb is don't take "No" for an answer - at least not without talking to an Advisor first as some 60% to 75% of disability benefit appeals are successful.
However, that can take time, and so there might be a need to protect that potential Pension Credit while the disability benefit is sorted out. This is much simpler if you are already on PC now, as any extra that becomes due in from additions from a successful AA appeal can simply be backdated along with the disability benefit itself after a successful appeal.
If you would not currently be entitled to PC , then there is a way of protecting that potential PC in case. This involves making a claim sandwich! You basically:
- put in a PC claim now, knowing that they will answer No without asay a severe disability addition in your sums
- You then make make the claim for Attendance Allowance , and persist through any refusal . You might first ask for a Mandatory Reconsideration, then if needs be, go on to an independent appeal. Eventually you get that AA backdated to the first day that you claimed it.
- You then go back to PC and make a new claim that can be linked back to the first PC claim . You are now entitled, and you can get any PC paid all the way back to the date of that first claim.
This extra hassle arises because there is no provision to just simply look again at the original PC claim and redo the sums with additions included. Nor can they just leave the claim undecided until your AA claim is sorted out. Common sense would suggest allowing either of these options to make make life easier all round.
5 Summary of this Benefits, Cancer and Pension Age series
Cancer can bring with it real additional costs: fares to specialist regional centres or further afield, extra warmth, different clothing, extra fuel costs staying at home more and feeling the cold, special foods and complementary medicines . And just making the most of good days and having some well-earned treatments and benefits can help. Your income may be fixed and perhaps you may not face the same drops in income directly as those having to take time off work, but you may still feel some change.
5.1. Looking back over these blogs
Benefits then can make a real difference, to free you from financial worries and help meet some of those extra costs
- In Part 1 - we looked at how the benefits system works, some basic terminology , what is happening with pension age and where benefits over pension age sit in this age of change and welfare reform
- In Part 2 – we looked at how the traditional State Retirement Pension works and how it has evolved over time. This may be of interest as your main benefit and as the biggest benefit of all . But your State Retirement Pension is paid at the same rate in sickness and in health, so it won’t change as the result of cancer coming crashing into your life. However, this may be different for occupational and private pension schemes whether you are in the run up to pension age or have retired, but still have Pension Choices open to you.
- In Part 3 – we looked at the new State Retirement Pension that will affect those who reach pension age after April 2016, but also how it connects with the old scheme, which may still remain very important for new pensioners for quite a time yet.
- In Part 4 – we started looking at the extra help that is available in the event of a cancer diagnosis in general. Some - such as disability benefits - are available regardless of your income and savings, while others such as Pension Credit is aimed at those on lower incomes, but steps up a gear for those experiencing health issues or who are carers.
- Here in Part 5 , we have seen, how Pension Credit works in practise with the help of some carousel chums … Pension Credit then has no savings limit and can stretch a lot further up the income scale than you might at first think. Even the basic levels are higher than people imagine, but with the additions - that may well be relevant to people affected by cancer - many more people can become entitled to PC. As a result, and not counting any disability benefit income, a single person with an income of £260 a week or a couple nearing £450 could still get some Pension credit.
5.2 The Attendance Allowance effect
Many over pension age who get a cancer diagnosis - regardless of income and savings - can apply for a “disability benefit" - such as Attendance Allowance(AA). However, Age UK estimate that only 50% of people who could be entitled to AA actually claim it and many forms are never returned.
Please then, don’t be put off by antiquated names such as Attendance Allowance nor the long forms - you can be very much walking wounded and fiercely independent and still qualify. Do find out more - e.g. from the blog here - and if in doubt do get advice from your nearest Maggie’s Centre.
An award of a disability benefit can mean extra money for a carer, but there is a potential warning if they were to actually receive that Carers Allowance. An award of CA can sometimes adversely affect the benefit of the person you look after. However, where both people are over “pension age” then Retirement Pension can knock that worry on the head. If in doubt, do get advice
5.3 The Pension Credit difference
Pension Credit is there to top up the low income of anyone over 64 and 2/3 at the time of writing – becoming the standard pension age of 65 – for both PC and State Retirement Pension for men and women in November 2018. Thereafter that common equal pension age will start rising to 66 at December 2020 where it will stay for a bit.
Mixed age couples: If you are one of a couple, it was the is the age of the older partner that determines if you can claim Pension Credit. That meant a younger partner whether just a few months or some years under “pension age” could come under a joint Pension Credit claim. But since 15th May 2019, both partners have to be over pension age, If not, the younger partner who may have to lead on a joint Universal Credit claim instead. All such mixed age couples will be £148.80 a week worse off and disabled couples up to £270 a week worse off.
Savings and PC : There is no upper savings limit for Pension Credit though they will affect the totals you might receive. So, depending on the gap between your income and your PC “appropriate amount”, you might have quite significant lifetime savings and still qualify for some PC
It's more than just the PC: Even if you only end up with a very small award of PC, as in the case of Zebedee, that can trigger full help with rent and council tax, and full access to health costs (e.g. fares to hospital and dental and optical charges). And it will get you over any savings limits within these other income-related benefits, taking you from no help at all with any rent or council tax to the maximum help the schemes allow.
Only some 60 to 70% of people who are entitled to a Pension Credit claim it, so don’t be one of the far too many who miss out. Even if you were not entitled to PC in the past, extra entitlements linked indirectly to a cancer diagnosis may mean that you may well now be. If you have claimed PC and receive some you may very well now be entitled to more.
5.4 Walking through the steps
A lot of maximising your entitlement to Pension Credit hinges on the even more under-claimed disability benefits so do look at these as well, as your entitlement will be based purely on the limiting effects of your cancer or other health conditions. These are dealt with in another separate series of blogs as they are very important to all age s who may be affected by cancer: childhood, working age and pension age alike.
In all the examples there is a walk through the steps we looked at in Part 1:
- Step 1 – Retirement Pension is very much a given with few problems to report, but you may have some queries or there may be some issues for say a younger partner yet to come of pension age.
- Step 2 – can you get some immediate help from Pension Credit and other means tested benefits right now? You may have been missing out for some years even before cancer came a calling. Or might you get some help in the future after a hop to Step 3
- Step 3 – regardless of income or savings you may very well be entitled to a disability benefit such as Attendance Allowance (AA)
And as in the Sound of Music steps there may be some gentle hopping back again after an award under Step 3:
- back at Step 1: does that award trigger some claims for Carers Allowance/Assistance
- back at Step 2: does that award trigger extra entitlements in Pension Credit that either increases an existing award or allow you to claim Pension credit for the first time
So, whether or not they are thinking steps or humming do-re-mi, that’s what your friendly welcoming Benefits Advisor will be doing with you at your local Maggie’s Centre.
And that’s why if you wander to your local Maggie’s centre on the off chance of some help with the often substantial costs of frequent travel to this hospital, you may emerge a little dazed but delighted with a cunning plan that might not only sort out those travel costs, but sometimes double your income too.!
Do then get your benefits checked out with the Benefits Advisor at your nearest Maggie’s Centre or elsewhere. You can do beautiful Pension Credit sums together, along with a full benefits check.
This does involve spending some time with forms, but at least in pension age things are a whole lot simpler and there is more of a tendency to treat people with some respect and less of that “working age” hostile environment thing going on. Forms are much shorter to do the same thing and you are more likely to be believed in “pension age” . Your Benefits Advisor will help you every step of the way and you may rather get to enjoy your time together even if the basic task can feel a bit daft and tiresome at times.
And you may also find a whole raft of support in other ways, a place to call in to and call your own on future trips to hospital and a whole group of friends not met yet. New friends who know what it’s like living with cancer in your life and with whom you don’t have to pretend and can feel freer to laugh, cry and if all else fails eat cake…
Links and further information
Finding individual help from an advisor:
- Visit your local Maggie's Centre and talk with one of our benefits advisors. Find your local centre here
- See if there is a Macmillan advice service near you here
- Find your local Citizens Advice office: in England & Wales - here. In Scotland - here
- Details of how to claim Pension Credit usually by phone but you can ask for a PC1 claim form - see here.
- You can see what a PC application form looks like - along with all the guidance notes - available here
- Copy of a PC 10 form – to have a severe disability addition added to your sums - see here-
Other blogs in this series
- Part 1: Introduction - when is pension age? welfare reform in pension age, steps to maximum entitlement - available here
- Part 2: State retirement Pension - the pre-april 2016 sytem - history and what makes up your entitlement - available here
- Part 3: State retirement Pension: the new post April 2016 scheme and how your entitlement is still largely governed by the old rules - available here
- Part 4 . Extra help after a cancer diagnosis in general and Pension Credit in particular - available here
Other useful blogs
- Find out more about.... Benefits and Cancer
- Find out more about befits for... Difficulties with day to day living and getting around
- Disability Benefits 1: AA, DLA, PIP and Cancer - available here