Pensioners face financial ‘rollercoaster’ over next few years

British pensioners’ next 12 months are set to be “one of the toughest on record” financially due to rising inflation, according to LCP partner and former Pensions Minister, Steve Webb.

The state pension is set to rise by 3.1 per cent in April, less than half the rate of inflation, and the Spring Statement measures offered “little help for pensioners”, Webb said.

Based on the latest forecasts from the Office for Budget Responsibility (OBR), the April 2023 state pension rise is forecast to be 7.5 per cent, representing the biggest increase ever, and by April 2024 the rate of the new state pension is set to go through the £200 per week barrier.

Pensioners will receive assistance over the next 12 months in the form of the £150 off council bills announced by the Chancellor, but only for those in properties in bands A-D, as well as £200 off energy bills in the autumn, although this will have to be repaid over the coming five years.

The Spring Statement offered little new hope for pensioners according to Webb, with the National Insurance changes offering nothing to retired pensioners and the five pence duty cut mainly benefitting those who are in work and drive regularly.

Webb pointed to another source that may be relevant to pensioners in the form of ‘hardship funds’, as an extra £500m has been pledged to local authorities.

He also looked ahead to April 2023 when the state pension rate will reflect the surge in inflation, with the OBR forecasting a 7.5 per cent increase that will add over £10 per week to the basic state pension and over £13 to the new state pension.

Webb commented: “Pensioners are set to face a financial rollercoaster in the coming years with a tough squeeze this year followed by a catch-up next year.

“The Spring Statement will have been a big disappointment, and some pensioners may find themselves having to apply to their council for hardship funds simply to make ends meet.

“But next year should see the biggest ever cash rise in the value of the state pension, as pension rates catch up. The problem is that ‘jam tomorrow’ will not pay bills today.”

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