State Benefits in Retirement

It’s a tough world for pensioners

When you retire, the whole world changes: you have to contend with a suddenly changed daily routine and you may be spending more time with your partner than at any other time in your life. If that isn’t enough, you no longer have your salary from work hitting your bank account every month. If you don’t have private pension arrangements, then this can be a very testing time financially. The state pension is unlikely to replace your income from your previous employment. But there is help at hand, even if you also benefit from private pension arrangements.

The state pension and pension credit

The amount you receive will depend upon the number of years that you have been making national insurance (NI) contributions. If you have 30 years or more of qualifying NI contributions, then you will be eligible for a full state pension. Currently (2012/ 13) this is £107.45 per week for single pensioners, and £171.85 for couples.

However, on top of your state pension you will also be able to claim the pension credit. This is an extra payment that guarantees a minimum income for people over 60. Currently this payment will top up your income to £142.70 for single people and £217.90 for couples.

Other benefits available

There are a range of other benefits that can be claimed by retired people depending you’re your financial and health situation.

Council Tax Benefit

For those on low incomes, it is possible to receive council tax benefits. The application for this benefit has to be made through your local authority or council, and the benefit is means tested: that is the amount you receive will be dependent upon your level of your income and savings.

Find out if you are eligible for council tax benefit

Health Benefits

All people over 60 receive free eye tests and prescriptions. However, many will be eligible for financial help toward dental treatment, the cost of glasses, and even the cost of travel to and from hospital. Those who receive pension credit guarantee credit can receive optical eye care vouchers and will not have to pay dental treatment charges, for example.

The help available with health costs

Disability Allowance and Attendance Allowance

If you have a disability and are under 65, then you may be able to receive a tax free benefit to help with the costs incurred because of your disability. Your eligibility for the disability living allowance (DLA) will depend upon your ability to perform certain activities of daily living, such as washing yourself, cooking, eating, and getting dressed, etc. The benefit is separated into two parts: a care element and a mobility element.

Payments are made in three bands according to your personal situation, from the lowest rate paid if your needs are minimal to the highest rate for those that need frequent supervision through day and night.

Attendance Allowance is a payment that is made to help you pay for help needed because of inability to look after yourself, in a similar way to the DLA measure. However, Attendance Allowance is paid to the over 65’s, and has just two rates of payment: the higher rate (currently £77.45 per week) and the lower rate (£51.85 per week).

Find out more about financial help if you are disabled or need care

Heating Costs

One of the major concerns for pensioners is the cost of heating in winter. The winter fuel payment is designed to help cover the extra cost of heating through cold winters. It is  payable to anyone who receives the state pension or pension credit, and is paid at a rate of up to £200 for those born before July 1951, and £300 for anyone aged over 80.

In addition to the winter fuel payment, if very cold weather persists where you live for a period of seven days or more between the beginning of November and the end of March you will be entitled to an extra £25.

Claims can be made by telephone to the Winter Fuel Payment helpline, 0845 915 1515.

Tax Allowances

All people aged 65 and over receive a higher personal tax allowance, and pay less tax as a consequence providing income is below a certain level.

At the present time (2012/ 13), the personal tax allowance for anyone aged 65 or over is £10,500, though this is reviewed in the budget each year; over 75’s benefit from an allowance of £10,660. These allowances are cut by £1 for every £2 of extra income over £25,400 until the allowance has been cut to the basic personal tax allowance of £8,105.

In summary

There are a range of benefits available to retirees and pensioners that will help financially. Health and heating costs tend to rise when in later life, and partly this is because of the extra time spent indoors rather than at work. These extra costs hit at a time when income decreases.

The government realises the burden that this puts on individuals and couples, and has made extra pension payments and other benefits available to address these problems. However, the sad fact is that many people don’t claim the payments and help they are entitled to. Many don’t even apply for a free travel pass from local authorities that entitle them to free bus travel. Those aged 75 and over are also eligible to a free television licence.

It is estimated that over £5 billion of means tested benefits are left unclaimed by pensioners every year. Don’t be one of the 1.6 million pensioners not claiming their full entitlement. Check out the Directgov website, and visit your local authority to see what help you can get with your weekly and monthly costs of living.