Does Your Parent Keep Their State Pension When They Go into a Care Home?

Topic cluster: Benefits & Financial Support | Reading time: 5 min

One of the most common questions families have when a parent moves into a care home is: what happens to their State Pension? The short answer is that the State Pension continues to be paid — but how it is used in a care home depends on whether the local authority is contributing to fees. This guide explains how the State Pension interacts with care home funding and means testing.

The State Pension Continues

Moving into a care home does not stop the State Pension. Your parent will continue to receive their full State Pension entitlement, paid directly to their bank account.

New State Pension (2025/26): £221.20 per week (if receiving the full amount)
Basic State Pension (pre-2016 retirees): Varies — up to £169.50/week

The amount received depends on your parent's NI record, not their care circumstances.

How the State Pension Is Treated in the Means Test

If your parent is receiving local authority funding for their care (i.e., the council is contributing to their fees), the financial assessment will count all income — including State Pension — when calculating how much your parent contributes to care costs.

In England: The local authority's means test counts the State Pension as income. After accounting for all income and applying the capital assessment, they determine a weekly contribution from your parent.

Personal Expenses Allowance: Care home residents who receive local authority-funded care are entitled to retain a Personal Expenses Allowance (PEA) from their income — currently £30.15/week in England (2025/26). This must be left to the resident for personal spending; it cannot be used toward care fees.

Scotland and Wales have higher PEAs — check with the relevant council.

For Self-Funders

If your parent is self-funding (paying care fees from their own savings/assets), the State Pension simply adds to the money available. There is no mandatory use of pension for care fees — but in practice, most self-funders use all available income toward fees, as care home costs significantly exceed State Pension income.

What Happens to State Pension if Your Parent Has Dementia?

If your parent has lost mental capacity, the person holding the Property and Financial Affairs Lasting Power of Attorney can manage the State Pension on their behalf. This includes ensuring it is paid into an account that the attorney has access to and using it for care fees or permitted personal expenses.

If your parent has no LPA, you would need to apply for Court of Protection Deputyship to manage their finances.

Benefits That May Be Affected by a Care Home Move

While the State Pension continues unchanged:

Attendance Allowance — stops after 28 days in a care home if funded by the local authority; continues for self-funders
Pension Credit — continues but is recalculated based on new circumstances; a care home resident may receive a higher amount if their income is low relative to fees, but this is complex — seek benefits advice
Housing Benefit — ceases once someone moves permanently into a care home (no longer applicable)
Council Tax — your parent's liability may cease if the home they've left becomes exempt; the care home itself handles council tax for residents

Checklist: State Pension and Care Home Move

☐ Confirm State Pension amount and payment date
☐ Notify DWP of change of address (to care home or to a bank account managed by attorney)
☐ Check whether Attendance Allowance will be affected by LA funding
☐ Speak to a benefits adviser about Pension Credit entitlement in a care home
☐ Ensure LPA (Property & Financial Affairs) is registered and being used correctly
☐ Confirm Personal Expenses Allowance is being retained from income

DWP pension service: 0800 731 7898
Benefits checker: Turn2Us (turn2us.org.uk)

Planning a care home move? homeformum.com helps families understand the full financial picture and find the right care home.