Retirees on lower annual incomes receive up to £5,723 less in state benefits each year compared to those on higher retirement incomes, according to new research.
Analysis carried out by retirement specialists, Just Group, found that retired households who earn the least receive on average £180 per week from benefits, whereas middle and higher-earning households typically receive £280 to £290:
| Average annual household income | Cash benefits received | State Pension received | Total benefits received annually | Total benefits received weekly |
| £3,385 | £1,921 | £7,461 | £9,382 | £180 |
| £6,029 | £2,819 | £10,788 | £13,607 | £262 |
| £10,875 | £3,511 | £11,548 | £15,059 | £290 |
| £21,972 | £2,825 | £12,280 | £15,105 | £290 |
| £59,995 | £1,736 | £12,843 | £14,579 | £280 |
Source: ONS “The effects of taxes and benefits on household income, disposable income estimate”
A number of factors could contribute to this difference in benefit payments, such as people not claiming the benefits they’re entitled to or not having enough qualifying years to claim the full State Pension.
Whether you have a low or high income, with living costs rising, it’s really important to make sure you are claiming whatever you’re eligible for. If you’re thinking about how you might increase your retirement income, you might want to consider carrying out some of the following checks.
If you’re thinking about getting professional financial advice, you can find a local financial adviser on VouchedFor or Unbiased.
Alternatively, if you’re looking for somewhere to start, we’ve partnered with independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 1,250 reviews on VouchedFor, the review site for financial advisors.
Make sure you’re claiming all the benefits you’re entitled to
One of the biggest reasons that some people have a lower retirement income is that they aren’t claiming the benefits they’re entitled to, with Just Retirement’s research showing that 62% of retired homeowners were missing out on £1,100 a year on average because of this. A further fifth of eligible pensioners (24%) were actually underclaiming, which saw them take an average annual financial hit of £660.
In many cases, people simply aren’t aware that they can claim certain benefits, particularly if they own their own home.
Stephen Lowe, group communications director at retirement specialist Just Group, said: “Eight in 10 retirees in the lowest income group own their homes, a higher proportion than the middling income groups – which means they can’t qualify for housing benefit. Our additional concern is that a ‘property rich, income poor’ group may unfairly miss out on benefits they are entitled to if they assume that owning their home disqualifies them.”
One of the main retirement-specific benefits that you might be able to claim is Pension Credit. It’s a benefit that is specifically designed to help people with a lower retirement income, even if you own your own home. With Pension Credit you might be eligible to receive up to £182.60 (2022/23 tax year) if you’re single, or £278.70 if you’re part of a couple. These rates will increase from 6 April to £201.05 if you’re single and £306.85 if you’re in a couple. You can read more about this in our article Pension Credit explained.
Claiming Pension Credit may entitle you to several other benefits. For example, Pension Credit claimants are entitled to free NHS dental treatment, along with help with the cost of glasses and transport to hospital. If you’re aged 75 or over and are receiving Pension Credit in your name, or in your partner’s name if in a couple, you should also be eligible to apply for a free TV Licence, paid for by the BBC.
In addition to Pension Credit, there are a number of other retirement-specific benefits you might be able to claim. You can read more about them in our article Over 60s benefits: Understanding your entitlements.
Check your State Pension
You need 35 ‘qualifying years’ of National Insurance payments to get the full State Pension of £185.15 in the current 2022/23 tax year (increasing to £203.85 in the 2023/24 tax year).
If you have less than 35 years, you’ll get a lower amount, based on the number of years you’ve paid. However, if you have never worked, then you wouldn’t have gained National Insurance this way, but you might have got National Insurance credits if you’ve claimed child benefits, Jobseeker’s Allowance, Employment and Support Allowance or Carer’s Allowance.
If you claimed any of these benefits for at least 10 years then you should be eligible for the minimum State Pension, with the amount you are entitled to relating to the number of years you have National Insurance credits for. If you have less than 10 years of National Insurance credits or contributions, you won’t usually be eligible for any State Pension.
You can check how much State Pension you’re on track to receive by requesting a State Pension statement.
Whether you’ve already retired or are approaching retirement, you might be able to top up the number of qualifying years you have by making voluntary contributions. You can usually make top up contributions to your National Insurance records from the last six years, however currently if you’re a man born after 5 April 1951 or a woman born after 5 April 1953, you have until 31 July 2023 to pay voluntary contributions to make up for gaps in your NI record between 2006 and 2016.
You can read more in our articles How the State Pension works and Is it worth paying to top up your State Pension?
Remember that you don’t get your State Pension automatically – you have to actively claim it. You’ll usually be sent a letter a couple of months before you reach State Pension age which will tell you how to do this. If you haven’t received a letter for some reason, or if you’ve lost it, you can claim your State Pension online or over the phone.
Where to go for more help
Whether you’re already claiming benefits or you’ve never thought about them before, it can be useful to speak to someone to make sure you’re claiming everything you’re entitled to.
There are a number of government-approved benefits calculators you can use as a first port of call to understand what you might be eligible for. These include Turn2us, which can assess your eligibility for benefits through its Turn2us benefits calculator or by phone on 0808 802 2000. The site Entitledto.co.uk also has a free benefits calculator which you can use to see what you qualify for.
Alternatively, you can get help from Citizens Advice. You can search for your local Citizens Advice here or you can telephone their customer service helpline on 0344 411 1444. Find out more about these organisations and other sources of help in our guide Five free sources of help if you’re making a benefits claim.
You can get more information on your State Pension, how this works and how to claim it from the Pension Service.
If you’re thinking about getting professional financial advice, you can find a local financial adviser on VouchedFor or Unbiased.
Alternatively, if you’re looking for somewhere to start, we’ve partnered with independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 1,250 reviews on VouchedFor, the review site for financial advisors.
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