As a UK citizen, you’re entitled to a number of welfare benefits. Your State Pension is probably one of the most important.
As we get older, worries can arise about the integrity of our pensions - especially once we make the transition into care home living. In this article, we’re going to take a look at how going into a care home affects your State Pension, and whether other benefits are affected.
First and foremost, moving into a care home does not affect the amount of basic State Pension you receive! You’ll receive the exact same amount as you did while living independently.
Receiving a State Pension however, can affect the amount of support you can claim in meeting costs of care. This depends on a number of other things too including:
After a needs assessment, your local authority will carry out a financial assessment (or a means-tested assessment) to work out if the council will pay towards your care. Generally the more money you have, the more self-funding you’ll need towards fees.
Financial assessments take into account the following:
Your State Pension will then be used to pay towards your care home fees. To make sure you still have a supplementary income each week, your local authority sets aside a set amount from your pension.
This is called a Personal Expenses Allowance (PEA) and it varies across the UK:
Local authorities in England have the power to increase PEA in special circumstances, such as supporting a spouse.
Like your State Pension, your Private Pension is not reduced when you move into a care home. You will continue to receive your private pension at the rate agreed by yourself and past employers.
However, local authorities take your Private Pension into account when they review your assets. If you’re worried about your assets being used when you still have loved ones to provide for, there is a way around this.
If you move into a residential or nursing care home, you could leave 50% of your Private Pension to your partner. That way, when the local authority begins their financial assessment, half of your private pension will be disregarded.
If you’re over the State Pension age and on a low income, you could claim Pension Credit. Over four million people are entitled to it, but over a third fail to claim it.
Based on your capital and income, Pension Credit comes in two parts:
If you’re trying to save towards your retirement, the government can help subsidise your savings. To qualify for Savings Credit, you must:
With Savings Credit, you could get as much as £14.04 into your account a week or £15.71 if you’re in a couple. However, there’s a catch.
For every £1 your income exceeds the threshold (£153.75 for single people or £244.12 a week if you’re in a couple), Savings Credit is reduced by 40p.
To calculate how much Savings Credit you get, your income is added all together. The first £10,000 of your savings isn’t counted, but every £500 over that amount takes £1 from your Savings Credit.
Whilst Savings Credit tops up your savings, Guarantee Credit supplements your weekly income. This is up to a maximum of £177.10 for single people, or £270.30 for couples.
To qualify for Guarantee Credit, you must:
Some people can qualify for an increased rate of Guarantee Credit. If you have severe disabilities, are a carer, or have certain costs associated with housing, you should enquire with your local authority.
When you apply for Guarantee Credit, the government takes your entire income into account, including your basic and additional State Pension, any other pensions, and any savings over £10,000.
Additional benefits, like Council Tax Reduction, Attendance Allowance are not included in this assessment.
When your local authority carries out a financial assessment, they assess your total capital to see if it’s below the thresholds for residential care funding. These thresholds vary in England, Northern Ireland, Scotland and Wales:
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If your council agrees to contribute to your care home fees, you can expect your income (this includes your State Pension and allowances) to be affected in the following ways:
There are exceptions to the above. For instance, if you suddenly come into a great deal of money, your council will stop funding your care and you will begin receiving the benefits above once more.
If you’re eligible, you can also claim several other benefits and income support from the government while you’re in a care home. These include:
If your spouse or partner has died, you may be able to claim Bereavement Support Payment to ease some of the resulting financial strain. As this benefit isn’t means-tested, it means anyone regardless of income level or employment can claim it.
There used to be several different types of bereavement related benefits, such as Bereavement Allowance, Widow’s Pension, Widowed Parent’s Allowance and Widowed Mother’s Allowance. They are now grouped together under Bereavement Support Payment.
The benefit consists of an initial payment of £2,500 (or £3,500 if you have children) and further instalments of £100 every month for 18 months. If you are eligible for Child Benefit, you can claim up to £350.
To claim Bereavement Support Payment, however, you must:
In 2008, Incapacity Benefit was phased out of the UK welfare system and was replaced by Employment and Support Allowance. Much like Incapacity Benefit, Employment and Support Allowance provides financial support to adults below the State Pension age who are finding it hard to find work due to their disability or illness.
The government is currently seeking to phase this benefit out in favour of Universal Credit for those on low incomes.
If you get ill from an injury or disease attained at work, or on an employment training programme, you can claim Industrial Injuries Disablement Benefit. The severity of your disability or illness affects how much you can claim, with a maximum of £182.90 per week and a minimum of £36.58.
If your disability requires a carer to help look after you, you can claim Attendance Allowance. Paid at two different rates; The allowance changes depending on the level of care you need.
If you’re physically or mentally disabled or have reached the State Pension age (or older), you could claim either £60 or £89.60 per week. Unfortunately, Attendance Allowance doesn’t cover mobility needs, but your other benefits may increase if you’re claiming it.
Your Attendance Allowance will continue if you’re in a care home, but not if you’re in a nursing home. However, if your care is paid for by your council or local authority, you can’t receive Attendance Allowance.
If you pay the full cost of your care home fees, you can still claim it.
Personal Independence Payment (PIP) is a benefit for those suffering from long-term physical or mental health conditions and have difficulty doing daily tasks as a result. You can claim PIP regardless of other benefits and employment.
There are two parts to PIP:
How much you get for each depends on how severe your illness or disability is.
Those living in care homes can still claim the Daily Living Component, but not the Mobility Component as they no longer need it.
DLA or Disability Living Allowance is currently being replaced by PIP. If you already receive DLA, your claim might end.
If you haven’t received a letter explaining how you can apply for PIP on the Gov.UK website.