retirement, SIPP and ISA

prescriptions/dentist,

uk.gov.social-security added

Bloody hell ! Is that correct - I've never worked it out.

Annually, I make the value of benefits for someone with no savings -

Rent £14,550 Council Tax £1,056 Winter Fuel Allowance £200 Eye care, say £60 Dentists, say £60 Medicines, say £60 ---------- £15,986

So you get benefits to the value of ~£16K *and* £6K (£114/week) pension credit, ie £22K which is equivalent to someone who works getting ~£29K, which is about the average salary. If this is correct then there's no way people should be saving using a pension plan - they should use other methods and in the years immediately before retirement blow the lot if they are not going to gain any benefit.

Daytona

Sources - Average annual rent - ARLA Members survey Q1 06 -

prescriptions/dentist,

prescriptions/dentist,

Rent for a single person is likely to be much less that that! There's no way housing benefit would pay that sort of rent to someone living alone.

7000 is probably more realistic.

Deduct single person's discount - 792.

Bear in mind this isn't means tested - all pensioners get it.

Again - all pensioners get free prescriptions.

Total about 7900 over and above a pensioner not entitled to means tested benefits with revised figures.

About 14k.

Remember that you *have* to "save" towards the basic state pension and the second state pension (or a contracted out scheme) through NI, so you need to deduct the amount you would get through these (say 6k or so in a full working life), making the benefits worth around 8k (or about 10k before tax) if that's all you have in retirement. Still very significant.

Also there's the rule that if you deliberately blow your savings with the intention of claiming benefits, you may be denied that benefit. If you blow your savings, or never built any up in the first place, because you are an irresponsible person who didn't consider the future, then you're all right!

Andy Pandy wrote

Point taken.

My lady friend does!

I think it's £106 including Pension Credit, and she still has to pay a few quid £15 towards the rent.

Council Tax single occupancy relief of 25% (not means tested!), and there may be a further reduction, but that is difficult to judge without knowing what her neighbours pay.

Not means tested, I get that too.

Daytona wrote

Ha ha ha! Welcome to the real world! What single pensioner on pension credit could look at a property of that rental? If they did, they would not get the full amount in Housing Benefit, but would probably be asked for a contribution of more than their total pension, it just doesn't work that way. If you are on Pension Credit level you have to look at property on which you will get a good proportion of the rent in benefits. Of course if you have a football team of kids you might be 'entitled' to a large property plus other benefits.

Maybe 25% of that amount for Single Person Occupancy..

These are all hypothetical and theoretical amounts which you cannot use to buy food. ;-)

Do any of you know anyone who is in this situation? I do, and I have to help her out financially. If I didn't, she wouldn't eat very well. :-(

Andy Pandy wrote

Thanks! That is a more realistic assessment, but my g/f gets approximately £4620 in rent assistance, and her meagre savings have been eaten into recently. The power bills alone are terrifying, and the £200 no longer covers the winter bills. It is all very well adding these benefits to the pension, but they are not disposable income. ;-)

The government reports that inflation is running at 2.4 -2.5% at the moment. But the government basket of goods from which this number is taken is biased towards cheap chinese goods for which prices are going down and excludes energy/council tax/school fees which are going through double digit percentage price increases. This is again another case of our wonderful government manipulating the figures so it can pretend everything is find and dandy. One economist has estimated that real inflation is running close to 10% and that the CPI index is meaningless.

I don't think it was meant to - it was meant to help with them.

An unemployed person under 60 would have to pay their fuel bills out of their

56/week JSA. Pensioners get nearly double that *plus* the 200 allowance.

But someone who has saved and has a decent pension will have to pay their own rent. That was the comparison.

And you would get approx 45 per person to live on after housing expenses. A single pensioner gets about 110 after housing expenses.

You forget about council tax benefit. A pensioner whose income (not including housing benefit etc) is below about 120/week and whose property is below band F would get their council tax paid in full by CTB.

Really? She must have very expensive taste in food then.

A typical family, with a single earner on an average income, with an average mortgage, would end up with less per person to spend on food/heating/clothes than a pensioner on the MIG.

They don't use CPI for benefit increases. They use RPI for some benefits (which is a more realistic measure), and average earnings increases for others like the MIG/PGC and the child elements of the CTC.

She should try living on what an unemployed 59 year old gets then.

Which means she must either be living in a house too big for a single person, or the rent is unreasonably high. Or she has non dependants living with her who should be contributing towards the rent.

106 is below the applicable amount for a pensioner so that income will not reduce HB/CTB.

She should get council tax benefit to pay the council tax in full (unless her house is band F or above!).

Agreed. But us under 60's get nothing, even the unemployed who have to pay it out of the 56 a week they get.

Of course, the Government would argue that someone who is unemployed is less likely to be tied to this same level of income for a number of years, ie they can get a job. This was the reason why long-term additions were first introduced to means-tested benefits in the 1950s and 1960s, to pay extra benefit to the groups of people who were likely to be living on subsistence benefits for a considerable time.

Robbie

It's true I do ....

Mike

Andy Pandy wrote

Yep. When I retired, because I took my small company pension immediately, when I signed on and went through all the interviews offering meter readers jobs in a rough part of town etc., I received precisely zero unemployment benefit (as was), and about £12 for my dependent wife.

Yes, I understood, but most state pensioners would be looking for property around £400 pcm, which is more than the housing benefit would amount to.

I am aware that working conditions and retirement prospects are grim nowadays, and that I was very fortunate to be able to retire when I did.

past due wrote

I can only say "yes, yes, and yes". :-(