CSR 2010: Savings Credit cut
One benefit for people over 65 was cut today – the one that helps the pensioners that have the least. The maximum award under Savings Credit (the part of Pension Credit that goes to those who have a second pension or modest savings) will be frozen for four years from 2011/12. While it is good news for the poorest pensioners that Pension Credit entitlements will not be frozen, those who are only a little better off will experience a real terms income cut.
The reason the Credit exists is to soften the taper that is faced by those who have some (but not large) savings as Pension Credit is withdrawn (after income of around £6,895 a year PC is withdrawn at 40p in the pound). Savings Credit is there to ensure that those who have saved a modest retirement income, but whose incomes remain low, are still entitled to an additional state top up.
The Telegraph have undertaken some good analysis of the impact that the freeze will have – claiming that about 1.8m pensioner households living on less than a third of national average earnings will each lose an average of more than £180 a year.