Moving into a care home is a monumental process that requires numerous considerations. These considerations include how you will pay for the care services, what will happen to your home and if you receive a pension how moving into a care home will affect your pension.
How moving into a care home impacts your pension depends on several rules determined by various circumstances. These circumstances include whether you will pay all your care home fees yourself, get help from the local authority or if your partner will keep living in your house.
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Depending on the above-mentioned factors, your pension will have various outcomes should you decide to move into a care home.
What Happens to State Pension?
Men born before the 6th of April 1951 and women born before the 6th of April 1953 are legible for State Pension. Even when in a care home, you will still be able to claim the Basic State Pension. People born before these dates are also eligible for the New State Pension.
If you’re paying for the full home care fees, you should continue receiving your pension as you normally do.
However, if you receive state-funded care (local authority paying some of the costs) your State Pension will be counted as income during assessment and will determine how much you will contribute.
During Financial Assessment, the local authority calculates how much of the care fees you should pay. The assessment includes all your sources of income and the State Pension is counted among them.
What you receive from your pension will be used to offset some of the care fees. But not all your pension will be deducted. The Personal Expenses Allowance (PEA) which is included in your pension is excluded. The exact amount you’re left with differs depending on your location in the UK.
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In most of the Mainland UK, the PEA is a pre-determined amount. But in England, the local authority can increase the PEA in special circumstances like if you’re supporting a spouse.
How Private Pension is Affected
Your private pension and state pension are treated the same way. If you pay for the care fees yourself, you continue to receive your private pension as usual as defined by your previous employers or yourself.
If the local authority is sharing the care fees, then your assets, savings and income (including your private pension) will be factored in the Financial Assessment.
In the event that you’re moving into permanent residential or nursing care but you still have a spouse living at home, you can opt to pass 50% of your pension to them. If you choose to do this, then the 50% will be disregarded from the Financial Assessment.
Are You Entitled to Pension Credit in a Care Home?
You must have reached the state pension age to claim pension credit, which comes in two parts:
- Savings credit
- Guarantee credit
When you move into a care home, your pension credit entitlement is calculated the same way as if you were living at home.
If you have capital of up to £10,000, it is disregarded. For anything above £10,000, you are treated as having £1 per week tariff income for every £500.
Guarantee Credit tops up your income if it’s below the appropriate minimum guarantee of £177.10 a week for a single person and £270.30 for a couple. Your guarantee credit is the difference between your assessed income, minus disregarded amounts, and the appropriate minimum guarantee.