How pensions affect benefits

It can help to plan your finances before you reach State Pension age or start claiming your pension. You might:

• lose benefits you claim
• be entitled to different benefits

A private or State Pension will affect benefits that are income-related. These can include:

• Income-related Employment Support Allowance (ESA)
• Universal Credit (UC)
• Jobseeker’s Allowance (JSA)
• Housing Benefit (HB)
• Carer’s Allowance (CA)

This could depend on your circumstances and how you choose to take your pension.

If you want to claim your State Pension, you must tell the Department for Work and Pensions (DWP). They will not pay you your pension until you contact them. This can be known as deferring your pension.

To make sure you receive payments on time, tell the DWP 6 months before you reach State Pension age.

Check your State Pension age (GOV.UK)

The way you take your pension will not affect how much money you receive in total.

The rules about income and capital would apply to the benefits you receive.

Savings are a type of capital. Find out how savings affect your benefits before getting your State Pension.

Savings and benefits

Deferring or delaying your pension

You can choose to defer your State Pension. While your State Pension is deferred, the weekly amount you’re entitled to increases. The longer you delay, the more it will increase. The total amount of State Pension would stay the same.

The amount you will receive weekly will depend on your circumstances.

Deferring your State Pension should not affect PIP or other disability benefits.

Some benefits including Carer’s Allowance stop you from building up extra State Pension if you defer.

Delay your State Pension if you get benefits or tax credits (GOV.UK)

Pension Credit has rules on notional income. This is where the DWP treats you as having income you do not get.

The amount of State Pension you’re eligible for will affect your Pension Credit. Pension Credit will treat you as having State Pension income, even if you defer.

A private pension is a workplace (company) pension or a pension that you have set up yourself.

If you take several smaller lump sum payments, the DWP could decide this was income.

How you choose to take your private pension could affect your eligibility to benefits. If you are unsure, speak to a benefits adviser before claiming your private pension.

Pension advice (Age UK)

Free impartial pension advice (Pension Wise)

When you reach State Pension age and start receiving your pension, you could become eligible for benefits or financial support. These include:

• Pension Credit
• Attendance Allowance
• support paying bills
• help with NHS costs
• discounted travel and days out

Benefits and financial support at State Pension age

Any existing ESA award should stop automatically when you reach State Pension age.

If you are approaching State Pension age, tell the DWP.

If ESA does not stop automatically, you could owe DWP money.

This includes:

• New Style ESA
• Contributory ESA (or contribution-based ESA)
• Income-related ESA

If you are in a mixed age couple and claim income-related ESA, this might continue.

Income-related ESA couples award

For an income-related ESA couples award, the rules might be different. This depends on the ages of the couple.

The ESA claim will end if:

• you’re both State Pension age or
• the main claimant of ESA reaches State Pension age

If the main claimant is under State Pension age, the ESA award will not stop. Any pension payments will count as income.

If you are already at State Pension age, you cannot start a claim for Personal Independence Payment (PIP).

If you have an existing PIP award, this will continue. You do not have to do anything.

If you are reassessed after State Pension age, your mobility component cannot increase, but the daily living amount can. You must continue to meet the criteria for PIP.

If you get DLA and you were born on or after 9 April 1948, you could claim PIP.

If you were born before 9 April 1948, you cannot claim PIP.

If you get DLA and you’re over State Pension age, the DWP will treat a PIP claim as if you were under State Pension age. This is an exception to the rule about not being able to claim PIP after State Pension age.

Housing Benefit helps you pay rent if you’re on a low income.

Housing Benefit

Existing Housing Benefit award

If you already claim Housing Benefit, your award will be suspended. This is because your local council reassesses your income. Pension payments count as income.

Before you reach State Pension age, tell your local council about your changing income. This should stop any missed payments.

Find your local council (GOV.UK)

Once reassessed, your award will continue if you’re eligible.

Claiming Housing Benefit

To start a new claim for Housing Benefit, you must be over State Pension age. The amount you receive depends on your income and other benefits.

If you’re a couple, you both need to be over State Pension age to claim Housing Benefit. If 1 person is of working age, you must apply for Universal Credit to cover housing costs.

You can submit a claim for Carer's Allowance if you look after someone for 35 hours a week or more and they receive certain benefits.

How to get social care services

Having a private pension will not affect your Carer’s Allowance.

Carer’s Allowance

Receiving Carer’s Allowance for someone over State Pension age

If you claim Carer’s Allowance and the person you care for is over State Pension age, your claim will continue if you both meet the criteria.

Carer’s Allowance eligibility (GOV.UK)

The person receiving Carer’s Allowance is over State Pension age

If you meet the criteria, you can still qualify for Carer’s Allowance when you’re over State Pension age. The amount of Carer’s Allowance you receive will depend on your State Pension.

If your State Pension is less than Carer’s Allowance, you will receive the difference.

You will not receive payments for Carer’s Allowance if you’re:

• over State Pension age and
• claiming a State Pension that is more than Carer’s Allowance

Qualifying for Carer’s Allowance, but not receiving payments, can be known as an underlying entitlement or the overlapping benefit rule.

Overlapping benefits (Turn2us)

If you’re eligible for Pension Credit and have an underlying entitlement, you would get a Carer Addition. This would be on top of Pension Credit.

Pension Credit: What you’ll get (GOV.UK)