pension credit law centre ni october 2009. pension credit two elements guarantee credit savings...
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Guarantee Credit
aged over 60 living in Great Britain habitually resident in Great
Britain right to reside not subject to immigration
rules
Additional amountsSevere disabilitySingle £52.85Couple one qualifies £52.85Couple both qualify £105.70
CarerSingle £29.50Couple one qualifies £29.50Couple both qualify £59.00
Appropriate Minimum Guarantee
Housing costs
Eligible housing costs mortgage interest interest on loans for repairs and
improvements ground rent service charges
Must be liable to meet the housing costs dwelling normally occupied by person claiming limited to £100,000 or £200,000 (but may
claim a transitional amount)
Non-dependent reductions
Gross income weekly
deduction£382 or more £47.75£306 - £381.99 £43.50£231 - £305.99 £38.20£178 - £230.99 £23.35£120 - £177.99 £17.00Less than £120 £ 7.40
No non-dependent deductions for non-dependent who is: Under 20 for whom person, partner is
“responsible” 16 or 17 years old under 25 in receipt of Income Support or JSA
(IB), or C/ESA or IR ESA assessment phase full-time student receiving Work-based Learning for Young
People Allowance temporarily absent from home for more than
52 weeks co-owner or joint tenant normally residing elsewhere in receipt of Pension Credit
in receipt of DLA or Attendance Allowance
registered blind or treated as registered blind
No non-dependent deductions where person claiming or partner is:
Income
EarningsNet earnings = gross minus tax
minusNational Insurance minus half of anypension contribution
Earnings cont…
Earnings Disregard£20 where a person or partner: is a lone parent is a part-time fire fighter, auxiliary
coastguard, part-time crew of lifeboat or member of T.A., part-time RIR or part-time PSNI
is entitled to a Carers additional amount in receipt of IB, SDA, DLA, Attendance
Allowance, mobility supplement, disability or severe disability element of WTC
in certain circumstances has previously had a £20 disregard
Benefits and Tax CreditsIgnore DLA Attendance Allowance Constant Attendance Allowance or Exceptionally
SDA Child special allowance Guardians Allowance increases in benefits for children Social Fund payments Child Benefit Christmas bonus Child Tax Credit Housing Benefit Bereavement Payments
Disregard £10
War Disablement Pension War Widow(er)’s or surviving civil partner’s
Pension pensions paid as result of death or
disablement of member of the services compensation for non-payment of War
Pensions Similar pensions paid by other countries Pensions paid to victims of Nazi persecution Widowed Parents and Widowed Mothers
Allowance
Count in full
Retirement Pension Shared additional pension Graduated Retirement Pension Occupational and personal pensions Income from overseas arrangement,
retirement annuity contract, annuities or insurance policies
Working Tax Credit Payment made under the Financial
Assistance Scheme
Other income
Maintenance – count in fullLettingRent from properties – capitalRent from own home – up to £20DisregardBoard and LodgingsDisregard up to £20 – half remainingbalance counts as incomeEquity ReleaseRegular payments – count in fullIrregular lump sums - capital
Capital
No upper capital limit
Capital below £6,000 is ignored £10,000 if in care £10,000 for all from 2nd November 2009
Income from capital£1 for every £500 or part of £500 over£6,000/£10,000
Assessed Income PeriodRetirement provision defined as:
Retirement Pension income
Income from annuity contracts
Income from capital
Assessed Income Period Over 65 (partner over 60)
– remains the same for 5 years (or 7 if transferred from Income Support on 6 October 2003)
Over 75 (partner over 60) – remains the same
indefinitely
Example 1
Ms B is single, age 74, lives alone in
private rented accommodation. Her
only income is her retirement pension
of £95.25 and Attendance Allowance
Example 1 cont…
Guarantee creditStandard minimum guarantee £130.00Additional amount: severe disability £ 52.85Appropriate minimum guarantee £182.85Income: retirement pension £ 95.25Appropriate minimum guarantee £182.85Less income £ 95.25Guarantee Credit £ 87.60 Mrs B is entitled to a guarantee credit of £87.60
Savings Credit
Aged 65 or over or have a partner who
is 65 or over
Can be paid in addition to guarantee
credit or in its own right
Calculating Savings CreditSix Steps Calculate income Calculate appropriate minimum
guarantee Calculate qualifying income Select savings credit threshold Compare qualifying income and
threshold Compare income with appropriate
minimum guarantee
Steps 1 and 2
Step 1 Calculate income – same as for
guarantee credit Step 2 Calculate appropriate minimum
guarantee – same as for guarantee credit
Step 3 Calculate qualifying income –
Income fromStep 1 minus any:– Working Tax Credit– Incapacity Benefit– JSA (C) – SDA– Maternity Allowance– Maintenance– ESA (C)
Step 5
Calculate maximum savings credit by comparing qualifying income and threshold
Less than threshold no entitlement More than threshold calculate 60% of the
differenceMaximum Savings Credit– Single £20.40– Couple £27.03
If the 60% is above the maximum then it iscapped at maximum
Step 6
Compare income to appropriate minimum guarantee
Income less than appropriate incomeguarantee entitlement is the amount calculated at Step 5
Income more than appropriate income guarantee calculate 40% of difference
Deduct from amount calculated at Step 5 to get entitlement to savings credit
If 40% is more than amount at step 5 then no entitlement to savings credit
Example 2
June is aged 72 and lives alone. Her
income includes her state retirement
pension of £95.75 and a private pension of £40.45 per week. She lives in rented
accommodation.
Example 2 cont…
Step 1: Calculate incomeRetirement pension £95.25Private pension £40.45Total (A on flowchart) £135.70
Step 2: Calculate appropriate minimum guarantee
Single (B on flowchart) £130.00
Example 2 cont…
Step 3: Calculate qualifying incomeNo exempt income therefore qualifyingincome is the same as her income
(£135.70)(C on flowchart)
Step 4: Select threshold (D)Single £96.00
Example 2 cont…
Step 5: Compare qualifying income with savings credit thresholdQualifying income £135.70Savings credit threshold £ 96.00Excess £ 39.7060% of £39.70 = £23.82
Higher than the maximum Savings Credit therefore capped at £20.40 (E)
Example 2 cont…
Step 6: Compare income with appropriate minimum guaranteeIncome £135.70Appropriate minimum guarantee £130.00Excess £ 5.70 (F)
Income more than minimum guarantee then calculate 40% of the excess
Example 2 cont…
40% of £5.70= £2.28 (G) To find out how much savings credit
she is entitled to take the £2.28 from the figure calculated in step 5
Step 5 £20.40 (capped at maximum)
Step 4 £ 2.28
Savings Credit £18.12
Passporting Benefit Passported BenefitIncome SupportJobseekers Allowance (IB)Pension Credit (Guarantee Credit)IR ESA
Free school mealsSocial Fund:CCG
–Budgeting Loans–Funeral Expenses–Maternity Expenses–Cold Weather Payments
Health BenefitsHousing Renovation Grants
Passporting Benefit
Passported Benefit
Pension Credit (Savings Credit) from
SOCIAL FUND – as above
Child Tax CreditWorking Tax Credit
Health BenefitsSocial Fund:
–Funeral Expenses–Maternity Expenses
Child Tax Credit and Working Tax Credit not in payment (gross income below £16,040
Free school meals
Housing Benefit Social Fund:–Funeral Expenses
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