State Pension: Expert outlines criteria to qualify
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Over half a million retired single women are relying upon the state pension alone, with experts warning this could be devastating given the cost of living crisis. The state pension is increasingly viewed as a safety net, with Britons being encouraged to make their own retirement provision – either through a workplace or private pension.
For some, however, this has not been possible, thus creating their reliance upon the state pension for retirement.
What can people do to reduce their reliance on the state pension?
Think about smaller pension pots
Dunstan Thomas states many people will have smaller pots they could have forgotten from previous years, for example, if they were auto-enrolled from 2012 onwards.
Individuals could call up the relevant provider, and if they have up to £10,000 in any of these pensions, they can take it in cash via a ‘small pot lump sum’ with 25 percent of it tax-free, and the rest potentially charged at one’s marginal rate.
Check state pension entitlement
Britons have been urged to check if their state pension entitlement is full, as it could have gaps due to breaks in employment history, for instance.
Some may be entitled to National Insurance credits to help them boost their sum.
Dunstan Thomas states people could potentially sell off old clutter or clothes online to make some extra cash.
The firm explained people are allowed to make £1,000 as a ‘trading allowance’ tax-free. Individuals don’t need to declare that even if they are over their tax-free allowance threshold which is £12,500 per year.
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Get a job
Some individuals may wish to consider registering with a few temp agencies, to see if they could secure part-time or flexible roles.
Many areas of hospitality and catering are finding themselves short-staffed and there may be a way to make some extra money.
The tips follow new research from Dunstan Thomas which shows the state pension is increasingly relied upon as a sole source of income for many older single women in the ‘Baby Boomer’ category.
Baby Boomers are considered to be people between the ages of 58 to 75, comprising millions of people across the country.
The research issued a stark warning to single women of this age group, over half a million of whom are reliant, or planning to be reliant, upon the state pension alone.
It means an estimated 557,600 single women of this age will have to fund their retirements on up to £185.15 per week – the full new state pension sum.
Dunstan Thomas has warned this will leave them highly exposed as the cost of living crisis continues to deepen, and a recession looms closer.
The nationwide study found single female ‘Boomers’ relying on state pension only, on average, anticipated a total annual pre-tax household retirement income of £10,241.50.
However, this figure is lower than the Pensions and Lifetime Savings Association’s (PLSA) ‘Minimum’ Retirement Living Standard.
The PLSA estimates single Britons need at least £10,900 a year to get by with ‘no frills’ in retirement when living alone and outside of London.
The study also found over two-thirds of single women of this generation have already stopped work in favour of being fully retired.
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Of the women who are already relying on the state pension as their principal source of income in retirement, those who are single look highly exposed to the risk of poverty once they retire.
Women in this situation may therefore have to consider the options at their disposal.
Some may need to return to work, while others may be required to reassess their retirement goals and what they can achieve with a limited income.
Others may wish to start their own business, for example, to create extra income for later life.
Adrian Boulding, Director of Retirement Strategy at Dunstan Thomas, told Express.co.uk: “Single Boomer age women who are reliant on state pension for their retirement income look particularly vulnerable as the cost of living crisis bites.
“This is particularly as two-thirds of this group of 58 to 75-year-olds are already retired. It may be too late for many of them to avoid poverty in retirement.
“The upcoming Pensions Dashboards which goes live from next April will offer a major opportunity to increase pensions engagement. We can only hope that this new centrally driven initiative achieves more than existing pensions engagement initiatives which seem to be failing the vast majority of Boomers.”
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