Pension Credit was introduced in October 2003.
It is a non-contributory, income-related benefit. Its purposes are:
To lift the poorest pensioners out of poverty by providing a contribution to a minimum guaranteed income for those aged 60 and over living in Great Britain.
To reward those aged 65 and over who have made modest provision for their retirement.
It is not necessary to have paid National Insurance contributions to be eligible. Pension Credit replaced the Minimum Income Guarantee (MIG), which, itself, replaced Income Support for older people in April 1999. However, the principle of a guaranteed minimum income continues to apply.
There are two parts to Pension Credit: the guarantee credit and the savings credit. The guarantee credit provides financial help for people aged 60 or over whose income is below a certain level set by the law. The level that applies depends on personal circumstances; this is the standard minimum guarantee. The awarded amount will depend on other sources of income, such as other pensions and savings. Extra amounts will be added to the standard minimum guarantee for those who have: relevant housing costs severe disabilities caring responsibilities
The savings credit is an extra amount for people aged 65 or over who have made some provision for their retirement (such as savings or a second pension) which brings their income above a level set by Parliament, called the ‘savings credit threshold’. The aim is to reward pensioners who have modest income or savings. A savings credit can be given on top of a guarantee credit. Claimants may still get a savings credit even if their income is above the standard minimum guarantee level.
DWP data downloaded from NOMIS website