What Happens With Your State Pension in a Care Home?

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.

Does State Pension Stop if You Go into a Care Home?

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:

• Whether you’re paying for the care yourself or if the care is publicly funded
• Whether the level of care required is social and/or medical

Financial Assessment

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.

What Does The Financial Assessment Take Into Account?

Financial assessments take into account the following:

• Earnings
• Savings
• Benefits
• Pensions
• Property

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:

Please note that PEA is now called the MIA, or Minimum Income Amount in Wales.

Local authorities in England have the power to increase PEA in special circumstances, such as supporting a spouse.

Private Pension

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.

Pension Credit

If you’re over the State Pension age (this is no longer a forced retirement 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:

Savings Credit

If you’re trying to save towards your retirement, the government can help subsidise your savings. To qualify for Savings Credit, you must:

• Have a minimum income of £153.70 a week if you’re single or £244.12 if you're a couple.
• Be aged 65 or over
• Live in the UK
• Have made preparations for your retirement, such as a second pension.

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.

Guarantee 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:

• Have an income below £177.10 or £270.30 if you’re in a couple
• Have reached the State Pension qualifying age if you’re a woman, or if you’re a man, have reached the State Pension qualifying age of a woman born on the same day as you.

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.

Council Funded Care & Pensions

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:

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:

1. At least some of your income and State Pension must go towards the costs of your care home. You’ll be allowed, however, to have a minimum weekly income - your PEA.
2. If you have previously received Carer’s Allowance or Attendance Allowance, you will no longer receive them.
3. Your Personal Independence Payment (PIP) or Disability Living Allowance (DLA) will continue if you’re in a residential care home but not if you’re in a nursing home.

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.

Other Benefits You Can Receive If Eligible

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:

• Universal Credit (replacing Housing Benefit)
• Employment Support Allowance
• Severe Disablement Allowance
• Bereavement Allowance (Widow’s pension, Widowed Parent’s Allowance, Widowed Mother’s Allowance)
• Child Tax Credit (if you’re still responsible for a child)

Bereavement Allowance

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:

• Be under State Pension age
• Have suffered the bereavement under three months ago

Incapacity Benefit or Employment and Support Allowance

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.

Industrial Injuries Disablement Benefit

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.

Benefits That May Stop

Attendance Allowance

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.

PIP Daily Living Component

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:

• Daily Living Component - for everyday tasks
• Mobility Component - for help getting around

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 Care Component

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.