According to reports, with inflation soaring in the UK, the state pension could increase by close to £300 next year. However, there are concerns that hundreds of thousands of people could miss out on the increase due to their payments being frozen.
Often, people who move abroad in retirement have their pensions frozen. Therefore, as inflation rises, they fall in real terms value year on year. At present, it looks as though the state pension could increase by over 3% next year, meaning those with frozen pensions miss out on hundreds of pounds. It is thought that more than half a million Brits with state pensions could be affected by this.
Inflation soared in August
The news comes after it was revealed that inflation for the year to August rose by its highest month-on-month level on record, rocketing to 3.2% from just 2% the previous month. The current inflation rate could see the state pension increase by nearly £300 next year. Such an increase will undoubtedly be welcomed by the many pensioners left disappointed by the suspension of the triple lock system for next year.
The state pension triple lock has been suspended for next year due to abnormal growth in average earnings resulting from the impact of the Covid-19 pandemic. However, the government has stated that the suspension is only a temporary one and that the system will be restored after next year.
Government officials are due to announce the rate of the state pension rise alongside next month’s inflation figures. Based on the current rate of inflation, this could see eligible pensioners receiving an additional £5.75 per week, which would take the weekly pension figure up to £185.35.
Pensioners could face anxiety over delays with state pension payments
Campaigners are claiming that many new pensioners could be left in a state of anxiety and financial stress due to delays with the payment of their state pension. This comes after the Department for Work and Pensions (DWP) said a combination of the pandemic and staffing problems had created a backlog in processing payments for people reaching state pension age.
The DWP is said to have apologised to those affected, and it is thought that there may be thousands of new pensioners facing these delays. However, there are concerns among some charities that those on low incomes could be severely affected by the backlog, and this could cause a considerable amount of worry for them.
Massive potential for anxiety and stress
According to one charity official, David Sinclair, director at the International Longevity Centre UK, there is significant potential for anxiety and stress, particularly among new pensioners already struggling due to a low income.
Mr Sinclair said, "For people who rely on the state pension as a relatively high proportion of their income it could be a bit of a disaster. The potential for anxiety and stress is huge."
The DWP has stated that it is redeploying many department employees to try and tackle the backlog. Officials apologised to the people affected for the delays they faced.
One spokesperson from the DWP said, "We are sorry that some new state pension customers have faced delays receiving payment. All those affected have been identified and we have deployed extra resources to process these as a priority. Any claims made today should not be subject to delay."
In the meantime, Mr Sinclair stated that the pensions system needs to be automated to avoid such issues and the burdening of new retirees. He added that older people were at risk of becoming confused about what they needed to do about claiming their pension, and an automated system would eliminate this issue.
Eligible customers urged to apply quickly for Warm Home Discount
With winter fast approaching, the Warm Home Discount scheme run by the government is set to come into force again. Energy suppliers are now gearing up to open applications from those eligible to receive the discounts. Those who meet the requirements are urged to get their applications in as soon as their supplier allows it.
Many suppliers have confirmed that their discounts will be issued on a first-come-first-served basis, as the number of discounts available is limited. Some have already confirmed their applications are open. For those eligible, speedy applications are vital to ensure they get their discount, which could give them £140 off their energy bill over the winter.
A welcome discount as energy prices rise
Many will welcome the Warm Home Discount this year in the face of soaring energy prices among the Big Six providers. Millions of households are set to see their energy bills rocket next month due to the increased energy price cap level that was announced recently.
For those who receive the discount, this will provide some temporary respite from the shock of their energy bills rocketing. However, because the number of discounts is limited, those who want it will need to act quickly and find out when they can apply.
The Warm Home Discount is not paid to the customer but discounted from their bill between October and March. The discount is given on electricity bills, but where consumers get their gas and electricity from the same supplier, they may be able to get the discount on their gas bill instead.
Those on a low income and certain benefits can make an application directly with their suppliers, who will then determine whether they are eligible. The discount is also available to eligible customers with prepayment metres.
It was recently announced that five of the Big Six suppliers had increased prices, raising concerns that some families will fall into fuel poverty. The move comes at a challenging time as the colder weather sets in, and people will need to use more energy to heat their homes.
The discount could be a saving grace for many affected by energy price increases, as it can make a big dent in the amount they have to pay for energy during the winter months.
FCA announces plans to crack down on investment scams
The Financial Conduct Authority has recently revealed plans to crack down on investment scams. Such scams have become a serious issue over recent years, and related losses have tripled in the space of three years. Many people have lost vast sums of cash to these scams, which the regulator is keen to address and stamp out.
According to data, savers lost close to £570 million due to fraud last year, three times more than a few years earlier. The FCA is now set to roll out an £11million campaign to try and raise awareness among consumers and bring to light the dangers of these types of scams.
The FCA described the scams as being investment cons that were facilitated or perpetrated by regulated companies. The campaign aims to reduce the cash lost to scams and cut the number of people investing in high-risk and unsuitable products by 50%.
A rise in financial fraud due to pandemic
There has been a sharp increase in financial scams and fraud over the past 18 months because of the pandemic. The FCA says it will now aim to be more "assertive and agile" when identifying and addressing criminal activities and behaviour. In addition, the regulator plans to keep a closer eye on the online activities of financial firms and put automated systems in place to pick up on suspicious activity.
The FCA will introduce various other measures, including changes in how the regulator detects and acts upon fraudsters. In addition, the information provided when firms and individuals submit applications for licences will be utilised to help detect potential fraudsters.
Sarah Pritchard, executive director of markets at the FCA, said: "We want to be able to adapt more rapidly to the changing market and be assertive where we see poor conduct and consumer harm.”
Another industry official, Simon Turner, said: "The challenges for the industry will not be immaterial. Firms should expect a tightening of regulatory standards and greater scrutiny."
Universal Credit cut could have a significant impact on older people
Earlier this week, there was a debate in the House of Commons about ending the £20 per week increase in Universal Credit payments, which began during the height of the pandemic last year. There has been huge controversy and debate over the cut, which is due to happen next month.
The increase in Universal Credit was brought in to help struggling claimants through difficulties during the pandemic. However, the government did state at the time that it was a temporary measure and has been planning to reduce Universal Credit back to its previous level. However, this has been hotly debated, with calls for ministers to cancel the reduction and make the uplift permanent.
Older people will also suffer
Many families stand to lose more than £1000 a year due to the reduction in the benefit. MPs opposing the move have been quick to point out that it is not just younger people who will suffer as a result.
MP Joanna Cherry took part in the debate earlier this week, and said the move would also significantly impact older people.
She said, “Particularly older single people will be affected by this cut as well. I have a 60-year-old female constituent with a mortgage who has had her hours of work cut from full time to 26hrs a week. She tells me that losing this uplift will mean the difference between keeping or having to give up the home she’s worked so hard to pay for.”
The Labour Party has urged the government to rethink the removal of the uplift, stating it will affect millions of households around the nation. Labour said it had given the government the opportunity to do the right thing.
Labour stated, “We have given Tory MPs the chance to do the right thing. We would expect them to vote on a motion that will have a major impact on people's lives."
Many claimants have expressed how worried they are about the decline in income from the Universal Credit cut. Some have said that it will affect their ability to put food on the table, pay to keep a roof over their heads and pay other essential costs.
However, those who support the reduction in Universal Credit have argued that claimants had to manage before the pandemic, so they should be able to do so again. They have also argued that the government always made it clear that this was a temporary measure that would end once the pandemic eased.