Thousands of pensioners warned Pension Credit loophole could see you at a 'financial disadvantage'

Pension Credit provides extra money for those on a low income who claim the state pension. It tops up weekly income to £218.15 for singles or £332.95 for couples.

It has now become even more important for pensioners to claim the benefit as Chancellor Rachel Reeves restricted the £300 Winter Fuel Payments to those on certain means-tested benefits, including Pension Credit.

Not only can Pension Credit claimants benefit from the Winter Fuel Payment, but they also have access to other support such as Housing Benefit, Council Tax discounts and a free TV licence for those over 75.

However, a recent report published by the Social Security Advisory Committee has warned those considering applying for the Pension Credit.

The report said: "There is a potential risk that some people may take steps to move onto Pension Credit in the belief that this would be beneficial, but ultimately be financially disadvantaged."

The Committee is urging pensioners on Child Tax Credits to carefully consider their options before changing to Pension Credits.

The loss of transitional protection could result in a significant reduction in financial support for some claimants. Transitional protection is money the Government gives as support to households as they move from other benefits to Universal Credit or Pension Credit.

This has been introduced as the Government continues its managed migration process. Those affected are advised to wait for official migration notices from the Department for Work and Pensions (DWP) before making any changes to their benefits.

The report states: "Pensioners currently in receipt of Child Tax Credit would lose their entitlement to transitional protection should they migrate to Pension Credit before they receive a formal migration notice from the Department.

"In the absence of any tailored communications for this group during the current take-up campaign, the Committee is concerned about the potential for confusion about what this group should do."

There are approximately 5,000 pensioners in this situation, and the lack of tailored communications for this group is causing concern.

Child Tax Credit is given to parents or grandparents looking after children aged up to 16, or in some instances children under 20 if they remain in full-time education.

On average, the amount someone can get a year comes to £545, but this can increase depending on the number of children they care for or if they are living with a disability.

However, those already claiming the benefit that try to apply for Pension Credit, will no longer receive the payments.

The Committee suggested that the Government either expedite the migration of these pensioners to Pension Credit or introduce an amendment to protect those who might be disadvantaged by responding to the current take-up campaign.

These measures aim to prevent confusion and ensure pensioners don't unknowingly worsen their financial situation.

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The DWP website states: "If you choose to apply for Pension Credit instead of Universal Credit, you will not get transitional protection and may receive less financial support."

It's crucial to carefully assess the financial implications before changing benefits. Pensioners can use the Pension Credit calculator on the Government website to estimate potential entitlements.

Those unsure about their options should seek advice from welfare rights organisations before making any changes to their benefits.