State pension insufficient for retirees' needs, report shows

Many pensioners are struggling to make ends meet, as the state pension does not provide enough money to live on. A recent report shows that a single person needs £14,400 a year for a minimum standard of living during retirement. However, the full new state pension offers only £11,502 a year, which is £2,898 less than what is needed. The basic state pension for those who retired before April 2016 is even lower, at £8,814. This amount leaves recipients £5,586 short of the necessary minimum. Even with additional help from pension credit, total incomes remain below the required amount. Chancellor Rachel Reeves has frozen income tax thresholds until 2028. There are speculations that this freeze might extend to 2030. This decision goes against her previous promises. Experts say she has limited options for raising revenue since she ruled out increasing common taxes like income tax and VAT. The personal allowance, which is the income that is not taxed, has also been frozen since 2022 at £12,570. If it had increased with inflation, it would now be over £15,000. Because of the freeze, more pensioners are starting to exceed this limit, meaning they may have to pay tax on their pensions. In April, the state pension will rise to £11,973, which is just £597 below the personal allowance. If it increases by about 5% next year as expected, it would push pensions above the allowance. This situation could force pensioners who rely solely on the state pension to start paying taxes.