Briefing Note 7 - Pensions incomes and council tax
After reaching retirement, income for a typical pensioner household does not change significantly. Incomes tend, at best, to increase in line with the RPI, though some of the poorest pensioners receive increases linked to earnings through means-tested benefits. Pensioners are therefore exposed to rapidly rising council tax rates, whose growth has significantly outpaced the RPI. Further, the relief that could be provided by council tax benefits is not always claimed.
This Briefing Note assesses indexation measures and how this impacts the state pensions and council tax levels. It finds that Council tax accounts for a higher proportion of total spending in pensioner households than in other households. 8.7% of expenditure of pensioners mainly reliant on state benefits is on council tax, compared to 3.1% for all households.
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Keywords: state pensions, state pension, council tax, council tax benefit, inflation, indexation, RPI, means test