State Pension: Is State Pension means tested?

A means test determines whether or not someone is eligible for Government assistance of welfare. The test is based on whether the individual or family possesses the means to get on without help. A means-tested benefit in the UK is a payment available to those who can prove their income and capital are below specified limits. So which benefits are means-tested? Is the State Pension means-tested?

What is included in a means test?

Not all types of income are considered when you are assessing whether you are eligible to claim a means-tested benefit, for example Attendance Allowance is ignored.

However, some types of income are fully considered, and your partner’s income and capital may also be included.

Your capital will be included in a means test, including:
• cash
• stocks and shares
• a share of any savings you own jointly with other people
• property other than your main home
• Premium Bonds
• National Savings accounts and certificates (there are special rules for valuing these).

But, any lump sum payments you received from deferring your pension is not included.

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Which benefits are means-tested?

• Pension Credit
• Housing Benefit
• Council Tax Support
• Cold Weather Payment

Is State Pension means-tested?

Your State Pension is not means-tested, but Pension Credit is.

The Government’s website says: “Not everyone will get the full new State Pension amount, it will depend on your National Insurance record.

“The full amount of the new State Pension is set above the basic level of means-tested support (this is Pension Credit standard minimum guarantee).

“The full amount of the new State Pension is £175.20 a week (2020 to 2021 rate).”

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What is Pension Credit?

Pension Credit is a benefit aimed at people over State Pension age that offers a weekly or fortnightly top-up to their income.

It is available to single pensioners, widows and widowers, and pensioner couples.

More than three million households are eligible for Pension Credit, nearly half of them fail to claim the benefit because they don’t realise they are entitled to it.

Check if you are eligible here or ring the pension credit claim line on 0800 99 1234 to find out more.

What are the capital limits for means-tested benefits?

If you apply for any means-tested benefit, your income and capital must be below a certain limit.

This level is an estimate of what you need to live on, and is set by the Government.

The capital limit is different for each benefit, and if your income and capital are greater than the level you may not be eligible to claim or will receive a reduced amount.
The Age UK site gives two examples:

Housing Benefit and Council Tax Support

The site explains: These benefits have a lower capital limit or £10,000 and an upper capital limit of £16,000.

“If you have less than £10,000 of capital then you should be able to claim the full benefit.

“If you have between £10,000 and £16,000 then you should get a reduced amount.

“However, if you have more than £16,000 in capital then you may not be able to claim Housing Benefit or Council Tax Support.

“This rule doesn’t apply if you receive the Guarantee Credit part of Pension Credit.”

Pension Credit

It says: “There is no upper capital limit for Pension Credit but you may receive a reduced amount if you have more than £10,000 of capital.

“For every £500 or part of £500 of capital over £10,000, you’ll be treated as having ‘deemed income’ of £1 a week.

“This is added to any other income you have, such as a pension.”

How do you get the full pension?

The full new State Pension is £175.20 per week.

How much you’ll receive is based on your National Insurance record.

You’ll usually need to have 10 qualifying years on your National Insurance record to get any new State Pension.

You may get less than the new full State Pension if you were contracted out before April 6, 2016.

You may get more than the new full State Pension if you would have had over a certain amount of Additional State Pension under the old rules.

You’ll need 35 qualifying years to get the new full State Pension if you do not have a National Insurance record before April 6, 2016.

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