Inflation costs UK pensioners £200 a year

Posted on 14 February 2011

Date: 12/12/2008
Inflation costs UK pensioners £200 a year

Pensioners will see the value of their state pension eroded by more than £200 by the end of the 2008/2009 financial year because of pensioner inflation, according to equity release provider Safe Home Income Plans (Ship)

Ship calculated that the average single pensioner who relied on the state pension, will see its value fall by £205.17, making the £60 bonus due to be paid in January pale in comparison.

The current weekly state pension for single people, effective from January 2008, equates to £4716.40 per year. However current levels of pensioner inflation, of 8.7%, will have eroded this to £4306.07 by the end of March 2009 – the resulting figure is then divided by two to calculate the impact of inflation.

Ship said the £60 bonus was ‘derisory’ in comparison to a loss in value of more than £200 and said the additional £4.55 per week that pensioners will get from April 2009 would do little to alleviate the financial difficulties they faced.

Andrea Rozario, director general of SHIP, said the government had offered too little, too late to pensioners in this year’s pre-Budget report.

‘A £60 bonus paid in January barely covers a third of what will have been eroded from pensions over the tax year by inflation. The additional £4.55 a week for single pensioners is almost an insult and much more needs to be done to help the 2.1 million pensioners living in poverty,’ she said.

She added that pensioners could consider boosting their income through equity release and estimated that a single 75-year-old woman with a £300,000 property could release up to £900 each month.

‘The over-60s can release some of the wealth tied up in their property and increase their retirement income substantially should they wish. We urge the government to work with us in promoting this as a very real alternative to poverty for pensioners,’ said Rozario. – 12 December 2008

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