How to Boost Your Pension Income

Written by Karen Bryan

The Pension Savings Hacks infographic below, from chartered accountants Alexander & Co, highlights some ways in which people who are already retired, or approaching retirement, can save money and boost their pension income.

If you are retired and your total income (from the State Pension, any private pensions, employment, interest on savings or some benefits such as Carer’s Allowance), adds up to less than £155.60 a week for a single person, or £237.55 a week for a couple, then you are entitled to Pension Credit to top up your income. Even if you don’t receive much income from Pension Credit, being in receipt of Pension Credit can give you access to other benefits such as a reduction in Council Tax.


If you can afford to delay taking your State Pension, called deferral, then you will receive more money at a later date. There are two State Pension deferral options.

The first is to receive a higher State Pension for the rest of your life. A one year deferral offers a payout, which is 5.8% higher than the regular pension, for the rest of your life. However, you have to factor in that you won’t be receiving any State Pension for that year. This means that you will need to live for the best part of another twenty years before you benefit from the deferral.

The second option is only available if you have reached State Pension age before 6 April 2016. You earn an interest rate of 2% above the Bank of England Base Rate on the deferred pension. Using the one year deferral example again, you would currently earn an interest rate of 2.25% (the Base Rate of 0.25% plus 2%) on the deferred pension. The first 25% of your deferral lump sum (including interest) is tax-free, making this option more attractive for those who have an income above the current annual personal allowance of £11,000 But the remaining 75% is taxed as income. When you start drawing your State Pension, you will receive it at the standard rate.

Once you retire you may spend more time at home than when you were working. This makes it all the more important to keep your energy bills in check. You could lower bills by getting free loft and cavity wall insulation. If you are on a low income, you may be able to get a new, more efficient boiler fitted free of charge. You should also shop around for the cheapest energy tariff. You will receive a small discount if you pay for your gas and electricity by monthly direct debit.

Doing some checks to see if you have any old pensions with former employers, savings, investment or life assure policies which you have forgotten could net you a nice payout. It’s also worth making sure that you are in the correct Council Tax band, as Council Tax can eat a fair proportion of pensioners’ income.

Free bus travel could save retirees money on transport, especially when they have more free time for days out. If you live in Scotland, the free bus pass kicks in once you are 60. Whereas, in most of England you have to be State Pension age to qualify for a free bus pass.

Several retailers, such as B&Q and Specsavers, offer discounts for the over 60s. Odeon Silver Cinema gives the over 55s lower ticket prices, plus free tea, coffee and biscuits, at specific screenings.

Some charities, e.g. Turn2Us, Age UK and Help in the Home, can assist with pensioner household repairs, maintenance and bills.

Following these tips can help you boost your pension income and save money, allowing you to make the most of your retirement.