State pensioners set for ‘tough time’ – could you get £3,330 to help?

Pension Credit: Expert discusses those not claiming benefit

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The state pension will rise in the coming week by a measure of 3.1 percent. This follows the temporary scrapping of the triple lock mechanism due to a perceived lack of affordability.

The rise means someone on a full new state pension will get £185.15 per week, while those on a full basic state pension should get £141.85 weekly.

With the triple lock suspended, the 3.1 percent increase has frustrated many people.

This is due to the rising cost of living, with inflation soaring to 6.2 percent, and expected to increase even further.

Indeed, pensioners will also have to reckon with rising prices of food, energy and fuel. 

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, discussed the implications for older individuals.

She said: “Pensioners are bracing themselves for a tough time ahead as soaring inflation takes enormous bites out of their purchasing power. 

“This year’s 3.1 percent increase in state pension is no match for inflation that currently stands at 6.2 percent and is set to go even higher in the coming months.

“Many pensioners will have other sources of income they can draw from but those largely, or wholly reliant on the state pension will certainly struggle, especially as they spend a greater proportion of their income on the things that are rising steeply – energy and food.”

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With a tough financial environment ahead, many people have been encouraged to look into their eligibility for Pension Credit.

Pension Credit is designed to assist people over state pension age who are on a low income.

It tops up the income of single pensioners to £182.60 per week, and £278.70 for couples, providing financial assistance.

However, it is also a gateway benefit, meaning it provides an open door to other means of support.

This includes help with bills, assistance with NHS costs, and a free TV licence for over 75s.

Ms Morrissey added: “It is a hugely helpful, but massively underclaimed benefit – only around two-thirds of people who can claim it actually do.”

The Government recently stated Pension Credit can be worth over £3,330 a year, which could provide a vital financial boost to older individuals.

This, however, is not the only action pensioners have been encouraged to take to protect themselves.

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Those with pension income aside from the state pension will also face challenges in the coming months.

Ms Morrissey explained: “Those who purchased an inflation linked annuity will see their income increase year on year in line with inflation but those who purchased a level annuity won’t.

“Retirees in drawdown may be considering taking more income from their pot this year in a bid to cover their increasing expenses. 

“However, this puts them at risk of depleting their capital and may mean they need to cut back in years to come.”

Consequently, the expert encouraged older people to build up a cash buffer of one to three years’ worth of essential expenditure if they can.

This will allow them to supplement their income in times where purchasing power is under threat – such as now. 

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