Pension Credit in a care home: how it affects fees
By CareFinder Team · Published 2025-11-13 · Last reviewed 2026-09-18
Pension Credit does not pay care home fees directly, but people over State Pension age can keep getting it in a care home. It tops up a low weekly income, which then counts in the council's means test and goes towards the fees. Part of any Savings Credit is ignored, savings up to £10,000 do not affect Pension Credit, and it can unlock other help.
Pension Credit does not pay care home fees directly, but it can still matter a great deal. It tops up a low weekly income for people over State Pension age, including people who live in a care home, and that income then goes towards the fees in the council's means test. It can also unlock other help, and part of any Savings Credit may be ignored when the council works out what your relative pays.
This guide explains who can get Pension Credit, how it works in a care home, and how it fits with the rest of care funding. It is general information; ask a benefits adviser to check your relative's situation.
What is Pension Credit?
Pension Credit is an income-related benefit for people who have reached State Pension age and live in England, Scotland or Wales. Northern Ireland has its own Pension Credit scheme run by the Northern Ireland Pension Centre, which works in a similar way.
It has two parts:
- Guarantee Credit tops up weekly income to a minimum level, set each April.
- Savings Credit is a smaller extra amount for some people who reached State Pension age before 6 April 2016 and have some savings or income of their own.
People who get Pension Credit may also get extra amounts if they are severely disabled, are a carer, or have certain housing costs. For couples, both partners' income and savings are counted.
Who can get it, and does owning a home matter?
According to GOV.UK, your relative may be eligible if they have reached State Pension age and live in England, Scotland or Wales, and their income is below the qualifying level. People can get it even if they own their own home or have some savings.
On savings, GOV.UK says that if someone has £10,000 or less in savings and investments, it does not affect their Pension Credit. Above that, every £500 over £10,000 is treated as £1 a week of income. The home they live in does not count as savings for Pension Credit.
The current rates are on the GOV.UK page what you'll get, and change each April.
Can you get Pension Credit in a care home?
Yes. Moving into a care home does not by itself end Pension Credit. What changes is the calculation:
- Temporary stays: Pension Credit usually continues, but some extra amounts can change.
- Permanent stays: your relative's circumstances change, for example if they no longer have housing costs or a partner at home. Tell the Pension Service so it can recalculate the award.
- Severe disability additional amount: this depends on getting a disability benefit such as Attendance Allowance. If that stops because the council or NHS is paying for care, the additional amount in Pension Credit may stop too. GOV.UK explains that people who pay for their own care home may keep this extra amount.
Report any care home stay of one night or longer to the benefits you receive.
How does Pension Credit affect care home fees?
In England, the council's financial assessment counts most income, including State Pension, private pensions and Pension Credit. The council then leaves your relative with a weekly Personal Expenses Allowance, and the rest of their assessed income goes towards the fees.
In practice, Pension Credit raises the income your relative can put towards their care, so it can reduce the amount the council needs to pay. It rarely changes the total your relative is left with each week, except in one way: part of Savings Credit is ignored in the financial assessment for people in a care home, so they can keep a small extra amount. The figures are in the government's charging circular for 2026 to 2027.
For care at home, councils in England ignore Savings Credit in full, and must leave people with at least the Minimum Income Guarantee.
How do capital limits and property fit in?
Pension Credit and the care means test use different rules:
| Pension Credit | Care means test in England (2026/27) | |
|---|---|---|
| Savings ignored in full | Up to £10,000 | Up to the lower limit of £14,250 |
| Above that | £1 a week for every £500 | £1 a week for every £250, up to the upper limit |
| Home your relative lives in | Not counted | Counted for a permanent care home stay, with exceptions |
For a permanent care home stay, the home is ignored for the first 12 weeks and while a partner or certain relatives still live there. If the home is up for sale and not being lived in, Pension Credit rules may also ignore its value for a period while it is being sold, so tell the Pension Service.
What other help can Pension Credit unlock?
Getting Pension Credit can open the door to other support, including:
- Housing Benefit for people who rent, and help with council tax;
- help with NHS costs such as dental treatment and glasses;
- a free TV licence for people aged 75 or over;
- extra help with heating costs in cold weather.
Because of this, it is worth claiming even if the amount is small.
How do you claim?
- Check eligibility with the online Pension Credit calculator on GOV.UK, or call the Pension Credit claim line.
- Apply online or by phone; a family member can help, and someone with a lasting power of attorney or appointeeship can claim on your relative's behalf.
- Have details of income, savings, and any housing costs ready.
- Claims can usually be backdated by up to three months if your relative was eligible, so apply promptly.
Frequently asked questions
Will Pension Credit pay my mum's care home fees?
Not directly. It tops up her weekly income, which then goes towards the fees if the council is helping to pay. It can reduce the council's share but does not replace it.
My dad has savings over £10,000. Is it worth applying?
Possibly. Savings above £10,000 reduce Pension Credit rather than stopping it, and even a small award can unlock other help. Use the calculator or ask for a benefits check.
Does selling the house stop Pension Credit?
Once the home is sold, the proceeds count as savings, which is likely to reduce or end Pension Credit, and the money will also count in the care means test. Report the sale promptly.
Should we tell the council that Dad gets Pension Credit?
Yes. The council asks about all income in the financial assessment. Mention any Savings Credit so the disregard is applied.
Who can help us check our entitlement?
Age UK, Citizens Advice and local council welfare rights teams offer free benefits checks.
Key takeaways
- Pension Credit tops up low incomes for people over State Pension age, including care home residents.
- Savings up to £10,000 do not affect it, and the home your relative lives in does not count.
- In the care means test it counts as income, but part of Savings Credit is ignored.
- Tell the Pension Service about any care home stay, as extra amounts can change.
- Claim promptly, as backdating is usually limited to three months.