How Moving into a Care Home Affects Your Pension

Many people wonder what happens to their pension when they move into a care home.

Here Baxendale Care Home, a residential care home in North London, look at the current arrangements which have been laid down by the Government and local authorities and how your pension (or pensions) and any additional benefits may be affected if you move into a care home.

Your State Pension

Currently, the State Pension age – the age at which you can begin to claim it – is 66 for both men and women. For those born after 5th April 1960, there will be a phased increase in State Pension age to 67; this process starts in 2026.

However, this figure could change in future – it depends on other factors such as average life expectancy, taxation, inflation, median earnings and more.

Care Home Fees – Who Pays?

If you’re paying all the care home fees yourself, you’ll continue to receive your State Pension as normal. The new full State pension, in the 2024-25 financial year, is £221.50 a week – this applies to any men born after 6 April 1951, and any women born after 6 April 1953.

Anyone born before these dates should be receiving the old basic State Pension of £169.50 a week. Both figures may depend on the amount of National Insurance Contributions you have made during your working life.

However, if the local authority (or, in a few cases, the NHS as part of the Continuing Healthcare scheme) is paying some of your care home fees, your State Pension will be included as income in a financial assessment when they’re calculating how much of the fees you can pay. This also takes account of how much you have in the way of savings, the value of your home and other financial factors.

If you have capital (assets) worth over £23,250 in England you will be expected to pay your full fees; between £14,250 and £23,250 then you will pay some of the fees, with the LA making up the rest; and below £14,250 you shouldn’t have to pay any of your fees.

So, if you aren’t paying the fees out of your own savings or income, and you have less than £23,250 in assets, then some or all of your pension will go towards your care home fees.

To make sure that you have enough money left over to live on each week, a Personal Expenses Allowance (PEA) will be given to you from your pension. This allowance can be increased by the local authority in special cases. The amount varies across the UK and increases along with inflation.

Your Other State Benefits

If the local authority is paying some of your fees, then some other State benefits will stop after you have spent 28 days in the care home – such as attendance allowance, the care component of disability living allowance (DLA) and the daily living component of your personal independence payment (PIP), and any housing benefit and carer’s allowance.

If you are paying your own care home fees, then the above benefits will still be paid into your bank account; and if you are only in the care home for a short time – for example if you are recovering from an operation – then the benefits will resume when you move out.

What happens to some benefits depends on the type of home you are moving in to – your PIP or DLA will continue if you are moving into a residential care home – but they will be stopped if you are moving into a nursing care home.

Baxendale is classified is a residential care home, based in North London; although we provide high-quality personal care and support, we don’t have medical professionals on site around the clock (for people with certain conditions, or to carry out certain procedures).

Also, once you are living in a care home, you and your partner will no longer be treated as a couple when it comes to benefit claims, so your partner may need to apply for benefits as a single person if they haven’t already done so.

Your Private Pension

Your private pension will obviously depend on the individual arrangements you have made throughout your working life – there isn’t a single standard figure as there is with the State pension.

Any private pension provision, like the State Pension, forms part of your overall financial assessment before you move into the care home. However, unlike the State equivalent, you will still receive your private pension. It won’t be deducted at source, but if it’s a significant sum you are more likely to be paying some or all your fees yourself.

If your partner is still living in your property when you’re a permanent resident in a care home, then you can give your partner half your private pension, and this will not be included in the financial assessment.

Baxendale Care Home – a Residential Care Home in North London

At Baxendale Care Home, we will explain all the financial arrangements with you on an initial visit and are happy to answer any questions you or your loved ones might have about the financial side of staying with us.

As well as being classed as a residential care home, we also function as a respite care home and a dementia care home in North London.

If you have any questions, you can also check the FAQs section on our website as this answers many of the most common queries from potential new residents and their loved ones; alternatively you can call us on 020 8445 1127 or contact us and fill in the online form.