We are much worse off from losing benefits since I began drawing my state pension – can I stop taking it? Steve Webb replies
I have just started receiving my state pension. Before this my husband was getting his pension plus guarantee pension credit.
We were getting full housing benefit and council tax help. We will now lose our housing benefit help and will be much worse off.
So, could I defer my pension and go back to how we were? We lose all the benefits that pension credit gave us, and as a result will be very badly off. Any advice would be appreciated.
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Money worry: Can I defer my state pension so we don’t lose benefits?
Steve Webb replies: You are right to say that starting to receive a state pension can have a negative effect on your pension credit and other benefits, but hopefully the overall effect will not be as negative as you fear.
I will also pick up on your suggestion of deferring your state pension to get round this.
Pension credit has two elements – a ‘guarantee credit’ which tops people up to a standard minimum amount and a ‘savings credit’, which provides a top-up to reward those who have done some saving on top of their basic state pension.
The maximum guarantee credit for a couple is currently £265.20 per week.
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Every pound you have coming in through state and private pensions reduces your guarantee credit on a pound-for-pound basis.
This means that if you and your husband have more than £265.20 per week coming in through your combined state pensions and other pensions then you would no longer get guarantee credit.
There is a chance however that you might still get some savings credit, and it would be worth checking this.
In terms of your housing benefit, receiving the guarantee credit is a ‘passport’ to getting your rent paid in full.
But if you stop receiving guarantee credit this does not mean that your housing benefit will fall to zero.
Instead, you would need to make a claim to your local authority for help with your rent. Although you will not get your whole rent covered, you should find that you still get some help if you are on a low income.
Much the same argument applies to help with council tax. Although each local authority has its own scheme for helping with council tax bills, you should still be able to get some help even though you are no longer on pension credit.
There are however some things which are largely restricted to those on pension credit, including things like access to the ‘warm home discount scheme’, and you may no longer qualify for these.
With regard to deferring your state pension, whilst you are free to defer if you wish, this will not help with the issue you have raised.
This is because the Department for Work and Pensions (and your local council) will be aware that you could be accessing your state pension and will treat you as if you are doing so, regardless of whether you have actually made a claim.
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Former Pensions Minister Steve Webb is This Is Money’s Agony Uncle.
He is ready to answer your questions, whether you are still saving, in the process of stopping work, or juggling your finances in retirement.
Steve left the Department of Work and Pensions after the May 2015 election. He is now a partner at actuary and consulting firm Lane Clark & Peacock.
If you would like to ask Steve a question about pensions, please email him at email@example.com.
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If Steve is unable to answer your question, you can also contact The Pensions Advisory Service, a Government-backed organisation which gives free help to the public. TPAS can be found here and its number is 0800 011 3797.
Steve receives many questions about state pension forecasts and COPE – the Contracted Out Pension Equivalent. If you are writing to Steve on this topic, he responds to a typical reader question here. It includes links to Steve’s several earlier columns about state pension forecasts and contracting out, which might be helpful.
If you have a question about state pension top-ups, Steve has written a guide which you can find here.
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