Millions of Pensioners Not Claiming Pension Credit Skip Meals to Save Money

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Almost a million pensioners have been found to regularly skip meals and cut down on food bills in a bid to save money, it has been pension-credit-povertyreported.

Research from the later life charity Age UK has shown that the current cost of living is proving too much for some older people, with many choosing to spend less on food in order to pay for more pressing costs such as utility bills instead.

The charity reported that more than 1.6 million older people aged 65 and over shop for food in the reduced-to-clear section of their supermarket or wait for it to be discounted at the end of the day. Elsewhere, 1.4 million have said they save money by growing their vegetables, whilst 500,000 have said they have given up meat.

More worryingly is the fact that more than 155,000 have said they skip meals to save money.

Charity director Caroline Abrahams of Age UK said:

[quote]Our research shows the extreme lengths many older people are going to just to get by. Cutting back on food or traipsing from shop to shop should not be an acceptable norm of everyday life.”[/quote]

Ms. Abrahams went on to say that if all those eligible to claim Pension Credit were to apply, their income could increase by £1,716 a year. The new benefit was introduced in 2003 as a means of topping up the income of retired people, by means of Guarantee Credit and Savings Credit.

Guarantee Credit is granted to people whose weekly incomes fall below £148.35 (if they are single) and £226.50 (for couples). Savings Credit on the other hand is paid to those who have also saved up some money during their lifetime towards their retirement, such as a pension.

Findings have suggested that more than four fifths of people receiving Pension Credit are able to afford good quality food and eat a balanced diet, without having to cut back on other essentials.

Ms. Abrahams commented:

[quote]Good quality food is vital to an older person’s health and wellbeing and should not be compromised by the pressures of other household bills.”[/quote]

For those new to claiming Pension Credit, Age UK has published a guide for older people to help them through the process. To order a free copy, claimants can simply call Age UK Advice on 0800 169 65, or visit their local Age UK.

Alternatively they can also visit ageuk.co.uk/calculators to calculate how much Pension Credit they may be entitled to, as well as other benefits.

A Third of People Will Be Able To Access Flexible Pension, Say HMRC

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It is estimated that 130,000 retired people per year will take money out of their pension pot under new flexibility rules, according to the tax authority.

In the Budget, Chancellor George Osborne said that people who had saved would be able to use their pension pot however they liked. This means that retirees will be able to take it in cash,although the majority of this would be taxed, from next April.

In a document which outlined the impact of the policy which has now been published, HM Revenue and Customs said that a third of people would use this option. Initially, around 400,000 people would have the chance, with 130,000 of them expected to take it. Pension Credit

Until now, most people who have taken part in defined contribution schemes, where the pension amount depends on the amount of investment, bought a pre-set income from a provider when they retired. From next April, people from the age of 55 will be able to take the cash- but only the first 25% would be tax free and the rest would be subject to income tax.

A pensions research insider said:

[quote] “Tax could easily wipe out a sizeable chunk of peoples pension savings, potentially taking many people into the higher rate tax band who have never paid tax at that rate before. Trusting people to act responsibly with their pension savings is a huge step forward, but it is essential to back this with the right guidance and advice.” [/quote]

However, in contrary to this, the organisation Saga had asked 2,400 people over 50 about the new rules, with only 15% saying that they planned to cash in their whole pension. Saga joked that it had found just 23 people who wanted to ‘blow their pension on a Lamborghini and living the high life.’

Saga said that the other half plan to use the money to secure a future income for their retirement.

 

Pension Credit Gives Pensioners Better Quality Of Life

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Research has shown that over a million people of pension-claiming age have had to reduce the amount of food shopping that they buy in order to pay for hefty utility bills, according to the charity Age UK. The study shows that the cost of living is pushing many of the poorest pensioners to cut back on food and other things in order to pay for day-to-day essentials.

It has been estimated that around 1.6 million of these pensioners tend to shop in the reduced section or wait for food to be discounted at the end of the day, whilst 1.4 million are turning to growing their own vegetables to save money. Age UK’s Charity Director Caroline Abrahams spoke on the matter:

[quote] “Poverty remains the reality of life for far too many older people. Our research shows the extreme lengths that many older people are going to just to get by- but cutting back on food or traipsing from shop to shop shouldn’t be an acceptable norm of everyday later life.” [/quote]

The charity pointed out that if all the pensioners who are eligible for Pension Credit made a claim, their income could be increased by a national average of £1,716- this amount more than covers the cost of a dual-fuel utility bill which currently stands at £1,271 a year. The findings of the research point out that more than four-fifths of those receiving Pension Credit can afford to buy food of a good quality and have a well balanced diet. Age UK

To help pensioners, Age UK has produced a new Pension Credit guide to help older people who are on a low income claim the extra money that they are entitled to. Pensioners should contact their local Age UK for details of this guide.

Pension Credit is a top-up to a state pension. If you have a private pension, you may not be eligible or only entitled to a lower amount. Visit the Pension Credit page of this site for a more detailed breakdown of the criteria.

 

Why Are The Self-Employed Reluctant To Pay Into A Pension?

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A recent report by the Resolution Foundation suggests that there is a lack of pension saving among the self-employed. According to a survey, 66% had no form of personal pension at all, and worryingly, only 39% of people aged 60 and above have a pension. There is also evidence of a gender gap in provision with only 20% of women compared to 34% of men actively contributing.Self employed

The report concluded that small business owners, the self-employed and freelancers are faced with a challenge when it comes to trying to make pension provision. Modern day businessmen and women will not have access to a fruitful 40 year scheme which will result in a defined allowance. However, instead of making provisions throughout their business lives, they prefer to concentrate on building up their cash flow and establishing their business.

Those who choose to delay their pension plans now find themselves penalised by the Chancellor who has reduced the annual allowance from £50,000 to £40,000, thus restricting the ability for wealth creators to be able to get their pensions back on track in time for retirement.

To minimise the problem for late starters, there is also the suggestion that in the face of a mounting bill for pension tax relief, the pensions minister could implement an effective 33% flat rate of pension tax relief. The Resolution Foundation report suggests some self employed people don’t invest in a pension as they believe they will be able to sell their business on retirement, so traditional pension planning is less important. This is dangerous as most of the time, the value of the business is based on the individual being the business driver. Therefore, the business could be worth a lot less without the owner being involved. Small business owners are, essentially, putting all their eggs in one basket by relying on the sale of the business to fund their retirement.

The Government is proposing the single-tier State Pension in 2016 with the opportunity for all self employed workers to be fully brought into the scheme.

The Self-Employment helpline can help with deciding how to pay into a pension if you are a small business owner.

Millions of Pensioners Fall £4,500 Short Of Meeting Basic Bills, Heating and Food Needs

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Millions of elderly people face a shortfall of up to £4500 a year between the state pension and their outgoings according to new research. The average pensioner household spends just over £10,000 each year on bills but the full basic state pension is just £5,881 annually, or £113.10 a month.

Pensioners who are lucky enough to have savings or a private pension can make up the difference but others risk having to cut back on food or heating in a desperate attempt to balance the books. Figures out this week reveal that 1.6 million of 10.8 million pensioners in the UK live in poverty. Of this number, around 900,000 are classed as being in severe poverty, having less than half the average household income. Pension CreditFigures from the Office for National Statistics shows that food is the largest bill for pensioners at £1,563 a year for the average household. Other large outgoings include rent and energy. In the South East, pensioners spend the most on basic essentials at £11,945 per year. In Wales, the average pensioner household is £8,829. A new flat-rate pension is also being introduced at a rate of £148.20 per week. However, there is still a £2,700 a year gap between the pension and the outgoings.

Dean Mirfin, group director at Key Retirement Solutions said:

[quote] “This analysis shows how many pensioners will have to make harsh spending decisions unless they have other provisions such as savings or a private pension. [/quote]

One former mill worker said that he had seen the price of everything go up, whilst the money to pay for it did not increase.

Age UK pointed out that help is available in the form of Pension Credit. Pension Credit is vital in helping pensioners on low incomes as it provides a top-up to their basic pension, however it is estimated that one in three pensioners who are entitled to financial support do not know that they are.