Published On: Sat, Jan 13th, 2024

Pensioners to get 4.75 percent real terms income boost with state pension increase | Personal Finance | Finance

will be better off in April as the state pension and benefits increase but rising living costs are eating into the value of their income increases.

Benefit payments, including Pension Credit, are going up 6.7 percent from April 6 while the state pension is going up 8.5 percent on April 8, providing a welcome boost to meet the rising cost of living.

asked wealth firm True Potential to crunch the numbers and verify how much better off pensioners will be as a result. The group found pensioners will potentially be 4.75 percent better off, depending on the levels of inflation over the course of this year.

Pensioners on the full new state pension will receive a real term pension of £213.21 a week, which is a real-term increase of £9.36 a week compared to now.

Neil Rayner, head of advice at True Potential, said: “Pensioners can expect some financial relief this year. The significant increase in the state pension, coupled with the easing of inflation, should make them feel relatively better off than in previous years.

“Specifically, the state pension‘s rise of 8.5 percent in April 2024 outpaces the current inflation projections. This means, in real terms, pensioners will receive about £213.21 a week, up from £203.85, which is a notable boost given the economic climate.”

The actual increases in the full state pension payments include the new state pension going up from £203.85 a week to £221.20 a week, while the full basic state pension is increasing from £156.20 a week to £169.50 a week.

Mr Rayner urged pensoiners to be “cautious” as they plan their finances for the year ahead. He said: “While the increase in the state pension is a positive development, there is still much uncertainty over how quickly inflation may fall over the year.

“The cost of living, especially essentials like food and energy, still remains high so whether individual pensioners actually feel better off will vary based on individual circumstances.

“Pensioners can take an active approach to prepare for any unexpected changes this year by reviewing and adjusting their investments, savings and budgets to make sure their money is still working as hard as possible for them in retirement.”

One factor that will ease the burden on household finances is are set to fall 14 percent from the start of April. Cornwall Insight is predicting bills for a typical duel fuel household will drop from £1,928 a year to £1,660 a year.

Pensioners may want to check if they are missing out on any benefit, especially Pension Credit, as hundreds of thousands of pensioners are currently missing out on the income boost.

A report from Just Group found pensioner households are missing out on an average £1,231 a year in extra income through not claim the benefits they are due.

The group spoke to one retired couple in Surrey who were not on benefits and who were missing out on £143.43 a week, which adds up to more than £7,400 a year. They were missing out on £111.30 a week in Pension Credit and £32.13 a week in council tax reduction.

For the latest personal finance news, follow us on Twitter at @ExpressMoney_.

Source link

Verified by MonsterInsights