Has anyone noticed that next April's increase in rates will see a difference between the State Pension £90.70 for a single person and the savings threshold for Pension Credit Savings calculation of £91.20. There is a similiar problem with couples. Have tried contacting DWP with no success. Does anyone know why this year there is a difference as it completely undermines the principal of Pension Credit Savings of rewarding people who have more than the State Pension? Cheers Barbara Knight

Noticed it but don't know why. All previous years the threshold has been RPI'd, in line with RP but not this year. Therefore the % rate increases for PC are as follows: SGC 4.2%, SDA 3.9%, SC 3.5%, CA 2.2%, Threshold 4.4%. Why should anyone be confused !

Shaun

Found the answer, which is long, but have copied below. Still trying to work out if its true!
Thanks for your help.
Barbara
In 2006 the Department for Work and Pensions published a White Paper “Security in retirement: towards a new pensions system”. In this White Paper we explained our intention to change the way in which the Pension Credit savings credit is uprated, see below:

“To ensure that, before implementing the earnings link of the basic State Pension, means tested provision continues to be focussed on those with small savings, we will take steps from 2008 to target the Pension Credit on this group.

We think this is reasonable because the State Second Pension has, since 2002, provided generous provision for low-paid employees. Those who earn between the national Insurance contribution Lower Earnings Limit and £12,500 a year (and those credited in) accrue a pension at a flat rate as though they were earning £12,500 a year and at twice the old SERPS accrual rate. This means low-paid employees get a more than fair return on their contributions. This must, over time, influence the design of the Savings Credit.

The Savings Credit will continue to reward people who make provision for their retirement. However, as State Second Pension matures, more and more people will have built up State Second Pension entitlement. We agree with the Pension Commission’s assessment that the starting point for calculation of the Savings Credit should be raised as this happens. From 2008 we will uprate the lower threshold of the Savings Credit by earnings. From 2015 the maximum Savings Credit will be frozen in real terms.”

When benefit rates for 2008 were being calculated, unusually the Retail Prices Index was greater than the Average Earnings Index. In this instance, increasing the Savings Credit threshold by earnings would not achieve the desired policy effect, so we are therefore intending to uprate the Savings Credit maximum by earnings. This achieves the policy intention by lifting the Savings Credit threshold just above the level of the basic State Pension and equates to around a 4.4 % increase in the Savings Credit threshold. (Legislation prescribes that the Savings Credit maximum equates to 60% of the difference between the savings credit threshold and the standard minimum guarantee.)