Can foster carers claim Pension Credit?

Pension Credit is assessed using your household circumstances, including your age, income, capital, housing costs and whether you have a partner. Reaching State Pension age does not automatically result in an award, because the amount depends on the information used in the calculation.

There are two parts of Pension Credit:

• Guarantee Credit tops up weekly income where it is below the relevant minimum level for your circumstances.
• Savings Credit is a separate element with different qualifying conditions. It is generally only relevant to people who reached State Pension age before the rules changed, so many new applicants will not qualify for it.

Fostering payments are subject to special benefit rules. The fostering allowance and certain other payments made for caring for a foster child are normally disregarded when means-tested benefits are assessed, rather than being treated in the same way as ordinary wages. However, the precise treatment can depend on what the payment is for, who paid it and whether you have other income connected with fostering.

This means that fostering does not automatically prevent a Pension Credit claim. It is still important to declare your fostering arrangements and provide a clear breakdown of payments. Do not assume that every amount received is disregarded: employment income, self-employment income, fees, private arrangements and other payments may be treated differently from a fostering allowance.

Other income that may be considered includes:

• State Pension and certain other benefits;
• occupational, workplace or personal pension income that you are receiving;
• earnings from employment or self-employment;
• some maintenance or regular payments; and
• income from savings or investments.

Capital and savings are also relevant. The assessment can include money held in bank accounts, investments and other assets, although a person’s main home is generally treated differently from accessible capital. A pension pot that has not been taken may be assessed differently from pension income already being drawn. Giving away money, deliberately reducing capital or transferring assets to influence a benefit claim can create problems, so take advice before making financial changes.

If you live with a spouse or partner, Pension Credit is normally assessed as a couple. Their income and capital may therefore affect the claim, even if they are not involved in fostering. The assessment may also need to take account of other benefits you receive and any changes to your household.

When applying, have relevant information available, such as:

• your National Insurance number and date of birth;
• details of your partner, where applicable;
• State Pension, occupational pension and other benefit information;
• bank, savings and investment details;
• evidence of regular income and housing costs; and
• records showing fostering payments separately from other income.

Keep fostering statements, payment records and annual summaries rather than relying on estimates. Good records make it easier to explain which amounts relate to the child’s care and which relate to your own income. They can also help if the decision-maker asks for clarification or if your circumstances change.

You can make a claim through the official Pension Credit service or by contacting the Pension Service. Ask for a full calculation based on your actual fostering arrangements, rather than using a general benefits calculator alone. A local welfare rights adviser, Citizens Advice or an appropriately qualified benefits adviser can help check the result. Your fostering agency may also be able to explain the nature of its payments, but it cannot decide Pension Credit entitlement.

Report changes such as starting or ending a placement, changes in fostering payments, beginning to draw a pension, changes to savings, moving home or a change in your relationship. A Pension Credit award may also provide access to other forms of support, but these can have their own rules and may be administered by a local authority or another organisation. Check each additional entitlement separately instead of assuming it follows automatically.

Fostering payments and Pension Credit are separate issues from pension planning. Receiving Pension Credit does not by itself create pension contributions for you, and paying into a personal pension can affect future finances without necessarily improving your current benefit position. Before starting, stopping or changing pension contributions, ask for advice that considers both your retirement plans and your benefits assessment.