Benefits to stretch a State Pension
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New figures released by the Office for National Statistics (ONS) show that inflation was higher than expected for September – which will mean a rise in State Pension values come April.
Back in 2010, the coalition government introduced its ‘triple-lock’ guarantee over the State Pension, guaranteeing an annual rise in line with either the higher of the inflation figures, the change in average earnings or a minimum of 2.5 per cent. September’s inflation figures were unexpectedly high, with the Consumer Prices Index (CPI) tracking at 2.7 per cent instead of the predicted 2.4 per cent. The inflation rate in September will therefore trigger a 2.7 per cent rise in the State Pension from April – that’s an increase of £2.97 per week to £113.12 – under the government’s guarantee.
The triple-lock was introduced as a way of mitigating the impact of the government’s decision to switch from tracking the State Pension against the Retail Prices Index to the CPI, which rises more slowly. Higher RPI relates to a higher cost of living, so concern about how far State Pension payments stretch continues.
Yet research has suggested that UK pensioners are missing out on up to £2.8 billion worth of benefits and credits simply by failing to apply for them. This guide put together by financial services firm Key Retirement Solutions runs through some of the windfalls pensioners may be missing out on:
Pension Credit consists of either Guarantee Credit or Savings Credit, and it tops up your income based on an assessment of your income from all sources. To qualify for Guarantee Credit, weekly income needs to be below £145.40 for a single person and £222.05 for a couple. Savings Credit is for those who have a small income from another pension plan or savings.
If you qualify as physically or mentally disabled, up to £79.15 per week can be obtained to assist with care costs.
The Winter Fuel Payment provides anyone claiming the State Pension with between £100 and £300 towards their winter heating bills if they were born before January 5th 1952. It should happen automatically but doesn’t in many cases, and sometimes claims can get the amount increased if your circumstances have changed. Also, when the temperature really drops, there are added benefits on offer; the Cold Weather Payment kicks in when the temperature drops below zero degrees Celsius for seven consecutive days, and pays £25 per day during the freezing conditions.
If someone close to you dies and the responsibility for arranging their funeral falls upon you, you may be eligible for a tax-free payment to help meet the costs, including up to £700 for funeral expenses, plus travel costs.
Pensioners are eligible for a free TV licence from the date of their 75th birthday, while anyone over the age of 60 in England will be eligible for free prescriptions and sight tests. Free dental treatment and a voucher towards the cost of glasses or contact lenses are also available for those receiving Guaranteed Pension Credit.
Alongside the benefits pensioners can receive to top up their pensions, there are loans available from the government under certain circumstances. For those on a fixed budget, sudden, unexpected costs can lead to the development of a debt spiral from which it can be hard to escape. Budgeting Loans can help with rent and the cost of buying furniture and clothes; they are interest-free and can be paid back over two years. Your local authority may also be able to provide a Crisis Loan in emergency circumstances.
Deferring Your State Pension
One thing to consider before you take up your State Pension is whether you can defer collecting it. It may be beneficial to live off your other income – savings, investments or a private pension plan – and collecting your state allowance at a later date; your State Pension will increase by one per cent for every five weeks you defer it, equating to 10.4 per cent a year.