‘Impact of inflation’ can’t be ignored by state pensioners

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Inflation continues to run high, as the Government and Bank of England seek to get it under control. However, it has undoubted impacts on day-to-day prices, as well as household costs.

The state pension will rise in April 2023, as usual, to reflect the current state of the economy.

Regardless, experts have warned people should be aware of the havoc inflation could still wreak. 

Shona Lowe, financial planning expert at abrdn, said: “The state pension is set to rise in 2023 in line with September’s inflation figures.

“Even though this is the case, retirees in particular will need to do what they can to continue mitigating the impact of inflation on their retirement income.”

As a result, the expert stresses it is important for older Britons to make time to regularly review.

Once a budget has been arrived at, it is vital to stick to this, Ms Lowe said, to help people feel confident they are progressing towards their goals.

She continued: “However, don’t be disheartened if you slip behind on your goals. 

“All too often, there are unexpected expenses that put us on the back foot, but the most important thing is to make a plan of how you can get back on track.

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“Once you’ve reviewed your finances, you may need to alter your plans and budgeting goals both in the short-term and long-term.”

The 10.1 percent boost to the basic and new state pension is likely to provide some relief for older Britons from April 2023 onwards.

The record rise has been secured due to the high inflation recorded throughout the year, namely in September 2022, and the return of the triple lock.

The full rates for 2023/24 will be:

  • New state pension – £203.85 per week, up from £185.15 in 2022/23
  • Basic state pension – £156.20 per week, up from £141.84 in 2022/23.

Not everyone will receive the full state pension, as this is based on a National Insurance record. 

For the new state pension, Britons typically need at least 35 years of NI contributions, while for the basic state pension usually at least 30 years are required. 

Some may get less than the full new state pension if they were contracted out before April 6, 2016. 

Planning doesn’t have to be an abstract goal for Britons when it comes to managing the impacts of inflation.

Instead, individuals can be proactive when it comes to keeping track of their money.

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Ms Lowe continued: “It’s a good idea to reassess where your hard-earned savings live. 

“Look around for the best home for them, whether it’s an instant access account, one with a notice period or a fixed term or an ISA.

“Securing the best rates can go some way to keeping up with inflation. And if you have investments, including your pension, revisit your attitude to risk and review your investment choices to make sure you’re poised to take advantage of opportunities for growth.

“Being aware of the changes that need to be made is crucial to staying on track with your finances.”

If a person wishes to understand their state pension more, they could visit the official GOV.UK website.

The Government has shared a full document which breaks down the new state pension.

It also addresses frequently asked questions, such as a person’s National Insurance record, state pension age, and contracted out individuals.

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