It’s no secret that the cost of living in the UK is set to skyrocket in 2022. First, we heard whispers of energy bills soaring, then came the threat of a rise in council tax and finally, the long-awaited soar of grocery bills arrived. With families across the country torn between feeding their families and keeping their houses warm, it’s clear life is about to become even more difficult for many Brits.
One demographic that’s likely to suffer from these climbing costs is pensioners, particularly now the government has binned the triple lock policy for at least the next year. Those relying on their pensions for food, utilities and general living costs are in for a shock, and many may need to assess their financial situations and put a plan in place to help them move forward.
Here, we explore the current state of pensions in the UK and how far they will be stretched as the cost of living continues to increase.
The demise of triple lock
Triple lock was a commitment by the government to increase the value of state pension in the UK by a minimum of 2.5% each year. Unfortunately, it was announced in 2021 that the policy was being suspended, over concerns that it would have caused an unaffordable rise in the next year.
The effects of triple lock being axed are likely to be detrimental to pensioners, even more so now that the cost of living is rising across the UK.
The rising cost of living
Many bills are set to rise across the UK and therefore the cost of living is going to increase. In 2021, there were rumours of energy bills increasing and it has since been confirmed that from April this year, the cost of energy will rise, with an increase of 54% for the typical household.
A hike in council tax is also due in April and it’s expected the minimum rise will be 3.6% per year, although reports suggest a rise of 5% per year can’t be ruled out. Additionally, the increase in the cost of groceries which has recently come into effect will only add to the financial stress many UK households are set to face.
How pensioners can prepare
Unfortunately, it’s inevitable that these sudden changes to bills and pension policies will affect pensioners across the UK. Keeping an eye on their energy usage will be crucial to ensuring bills remain as affordable as possible. Budgeting and cutting out any expenditures which are unnecessary will help to reduce the amount of money they spend overall.
It may also be worth considering their financial situation and exploring opportunities to obtain a little more money, for example, releasing equity from their property.
