Despite the introduction of a new single-tier state pension system in April 2016, many UK retirees are still struggling with inadequate income. Recent analysis reveals that approximately 150,000 pensioners receive less than £100 a week from their state pension.
Single-Tier Pension System: A Brief Review
The single-tier state pension was designed to simplify the payment system and provide fairer benefits. Initially, the government projected that most retirees would receive a higher pension over time. However, recent data from Royal London shows that only half of pensioners receive the full amount. In stark contrast, some retirees receive as little as £10 a week.
National Insurance Contributions and Pension Amounts
To qualify for the full new state pension of £221.20 per week in 2024/25, individuals need 35 years of National Insurance contributions. Those with fewer qualifying years receive a reduced amount. This disparity has led to a significant number of pensioners living on meager incomes.
The Role of Pension Credit
Pension Credit is a financial aid designed to boost the incomes of low-earning retirees. Despite around 1.4 million pensioners receiving this benefit, an estimated 880,000 households who are eligible have yet to claim it. The Department for Work and Pensions (DWP) is actively promoting awareness to increase take-up.
Upcoming Changes and Challenges
Recent government decisions include restricting winter fuel payments to only those receiving Pension Credit. This move affects approximately 10 million pensioners and is part of broader measures to address a £22 billion financial shortfall.
Improving Your Pension Income
For those with gaps in their National Insurance record, it’s possible to make voluntary contributions to increase pension amounts. However, a deadline of April 5, 2025, looms for making contributions to fill gaps from 2006 to 2018. After this date, only six years of gaps can be addressed.
The DWP remains committed to supporting pensioners, with promises to protect the triple lock and potentially increase state pensions by around £1,000 over the next five years according to telegraph.
