Glossary · UK
What is Savings Credit?
A now largely closed element of Pension Credit that gives a small extra amount to reward modest private pension or savings income, available only to people who reached State Pension age before 6 April 2016.
Full Definition
Savings Credit is the second, smaller element of Pension Credit, designed to reward pensioners who saved modestly for retirement -- through a small private or workplace pension, or other savings -- rather than relying solely on the State Pension, by paying a modest additional amount on top of any Guarantee Credit award. It is available only to single people and couples where at least one partner reached State Pension age before 6 April 2016, because it was closed to new claimants from that date onward as part of the transition to the single-tier new State Pension, which was designed to be set at a higher rate specifically to reduce reliance on means-tested top-ups like Savings Credit. For those who remain eligible, Savings Credit is calculated using a formula that rewards qualifying income above a set threshold up to a maximum award, then withdraws the credit gradually as income rises further, so the actual amount paid varies considerably between claimants depending on their other retirement income. Anyone who was already receiving Savings Credit before their partner reached State Pension age, or who has an existing award, can generally continue to receive it, but nobody can make a brand new claim for Savings Credit today unless both they and their partner (where applicable) reached State Pension age before the 2016 cut-off.