How Will Inflation Affect My State Pension ?



By Paul Lewis in SAGA Magazine.


Every April, state pensions and benefits for older people are increased to help them pay for the rising cost of food, energy and other essentials. But this year the amount paid to around two million of the poorest pensioners will not keep up with rising prices, as the Government quietly breaks the link between pension credit and the new state pension.

The poorest pensioners are those who get pension credit, a means-tested benefit that brings the income of a single pensioner up to the level of the new state pension less a few pence. Currently the full new state pension is £159.55 a week and pension credit is £159.35. So almost everyone who does not get an income at the level of the new state pension can get extra means-tested assistance to bring it up to within 20p of that rate.

From April 2018 that relationship will change. The new state pension will rise by £4.80 to £164.35 a week but the pension credit will increase by just £3.65, giving recipients £163 a week. That is an increase of 2.3%, which is well below the 3% rate of inflation used to raise the new state pension. This rise of 2.3% will also apply to means-tested help with rent and council tax paid to people over 65.


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