https://www.slideshare.net/slideshow/reducing-pensioner-poverty/252222487

For many people I know, the idea that £50,000 can be enough to get you out of poverty would be fanciful. For many people in their 50s and 60s who have just got by and saved nothing for retirement . auto-enrolment was the first chance to save for retirement. Many older people opted out of auto-enrolment, no one has done a detailed study of why but I suspect a group of savers who knew about pension credit, did not want money in DC pots losing them their entitlement to the substantial advantages of means-tested benefits. I know someone who preferred not to have the means to be seen as self-sufficient.

So why do I mention £50,000?  It is the amount the people at Just – the insurance group who are trying to demonstrate they  give a damn about how poor people get by, reckon you need to get to minimum income if you have a full state pension.

Because John Greenwood is an editor who gives a toss about the plight of people who have very little he has run the story. Here Corporate Adviser are covering the story.

The Maths isn’t hard but the concept is. Are people really better off getting to £14,400 pa – and who sets that as a minimum to live on? It’s £277 pw (a figure that pension credit uses)

You might be eligible for Guarantee Credit if you’ve reached State Pension age. This is currently 66 for both men and women.

If you’ve reached State Pension age, you can claim Guarantee Credit if your weekly income is less than:

• £218.15 if you’re single
• £332.95 if you’re a couple.

Even if your weekly income is higher than these thresholds, you could still claim Guarantee Credit if you meet one of the following criteria:

• you’re a carer
• you have a severe disability
• you have certain housing costs, such as service charges
• you’re responsible for a child or young person who usually lives with you.

The £11,502 you get with a full state pension if you’re on your own is £221 pw, just above pension credit. Many immigrants don’t have a full state pension, many people qualify for pension credit because they have one of the criteria above. Can you see why people are wary?

The amount you get from the state if you both get full state pension is £429 pw, a shed load over the pension credit limit so they don’t have an issue with extra income, they are unlikely to qualify for pension credit with or without it.

Here comes Just’s expert

That advice is  great if you are already well out of poverty but frankly has no value to those whose income is around the means tested amount. For them the advice may be best get rid of income that will deprive you of state help. Corporate Adviser puzzles over the way people get rid of potential pension from “small pension funds”

There is a lot of information for people at the bottom end of the income ladder but it doesn’t seem to have got to Corporate or Just.

I have to splutter at this point because the idea of an income of £14,400 without a lot of help from pension credit and what it gifts is not an easy one for me. £277 pw is not a good income. A lot of people who are not able to earn extra income are stuck in the gap between the limit for pension credit and the point where they get more being off state benefits.

For many of these people, the presence of pensions deprives pension credit.  These two quotes are from Government advice to advisers.

What counts as income for Guarantee Credit?

[Legislation 1]

Your customer’s income is the money they (and their partner if they have one) have coming in from:

• State Pension and any foreign equivalents
• an occupational or private pension scheme
• The Pension Protection Fund or Financial Assistance Scheme
• a retirement annuity contract
• Civil List pensions
• Annuities

---

Private pensions whether in payment or being deferred are means tested

Notional income

[Legislation 4]

Notional income is income your customer does not actually get but is treated as getting. We may treat them as having notional income when they have:

• not claimed State Pension but are entitled to it

• not taken income available to them under a personal pension plan or a retirement annuity contract

• deferred payments from an occupational pension

• given up their rights to an income (from a trust fund for example) because they wanted to get Pension Credit, or more Pension Credit

In short, the only thing that people going for pension credit can do to get rid of “guaranteed or notional” pension income is to do what this article is advising them not to – spend the pension pot.

You can find out more about Pension Credit for yourself or probably someone you know. If you are in the business of providing pensions, you should think very carefully about the advisability of getting those on low incomes opting in to workplace pensions. This is one of the reasons the Government did not require auto-enrolment for those with small incomes or down to the first pound of income,

Good places to start out.

Gareth and I started out on this some years ago. Here is the download

Here is a very good recent document from Age UK on the subject. Downloadable here