According to the Pensions Policy Institute, pensioners in the UK have to spend more of their income on council tax, when compared to the rest of us. The PPI's latest publication shows that up to 8.7% of a pensioner's income could be spent on council tax alone. This is the case where a pensioner is purely in receipt of State benefits and has no other form of income. The figure for the rest of the population is apparently an average of just over 3% of income.
Our View
These figures highlight just how important it is to save for your retirement. Pensioners that just receive State benefits are getting just a subsistence level of income. The basic State pension only increases with the Retail Prices Index, which is generally lower than earnings. As we all know, council tax can rise upto four and five times more than earnings have done, especially in the last year. Whilst the council tax rises will leave everyone worse off, some pensioners do receive council tax rebates and other services free of charge.
According to the PPI, just fewer than 2.5 million pensioners qualify to receive a rebate on their council tax bill. But, just less than 1.5 million are still paying their full bill.
Our advice is always to check with your local Department for Work and Pensions to see what benefits you could be entitled to. You could be surprised!