The flat rate state pension won't be better for all

Wrinkled female hand carefully holds a white piggy bank. Symbolic of pensions and senior poverty

The introduction of the flat rate state pension next year is supposed to mean a better deal for everyone, but it seems that one swathe of people have been overlooked.

The idea behind the flat rate, which will see the state pension increase to around £150 a week next year for those who have paid 35 years of national insurance, came from a good place. It was intended to make sure that no-one was left in absolute poverty in old age and make the extremely complicated system simpler.

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It will do its job for the majority of people, but a report by the London School of Economics and the Pensions Policy Institute has flagged up a problem. There is a distinct lack of transitional reforms for those older people who rely on benefits, such as housing benefit and council tax benefit.
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These benefits are means tested, meaning that the more income a person has coming in, the less help they receive. If the state pension is finally paying them a decent amount that's great news because they're getting more, but at what cost to their benefits?

The government may be giving with one hand but it could be taking with another, leaving people in a worse position.

The report says that people will lose more in means tested benefits than they receive through an increased state pension, which is worrying considering the flat rate was supposed to bring us a step closer to eradicating old age poverty.

Even more worrying is that this problem is only going to get worse if people are unable to buy properties of their own, pay off their mortgages before retiring and use their pension solely to live on rather than paying for accommodation.

There are thousands of people who are in their 30s and 40s who have given up on the dream of owning their own property and have resigned themselves to the fact that they will always be tenants. When they reach retirement, where will they live and who will pay for their rent?

We're rapidly selling off our social housing so their local council isn't going to be able to provide them with a property, they will be forced to remain in privately rented properties, handing over any pension they've accumulated to their landlord.

It's a worrying pattern that is emerging but unfortunately this government isn't even looking at how to solve the present housing crisis let alone a future housing crisis.

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The flat rate state pension won't be better for all

A study by MGM Advantage discovered that Portugal is the 10th most popular dream retirement destination among Brits.

You get the attractions of the sun, a more relaxed way of life, lower living costs and cheaper property. You can also benefit from pension arrangements that mean your pension rises with inflation.

And if you choose to, you can spend your time with the enormous expat population, feeling like you never left.

In the tradition of the Best Exotic Marigold Hotel, there’s a large number of people keen to move to India, partly in order to enjoy a much higher standard of living than they would be able to afford in the UK.

If course it’s important to consider that your state pension will not rise in line with inflation - so will halve in real terms during your retirement.

This part of Europe offers a great combination of some of the lowest living and housing costs on the continent, along with a more forgiving climate than the UK.

For that reason Bosnia and Herzegovina, Bulgaria, Croatia, Romania, Greece and Turkey are a big draw for retirees.

However, state pension provision varies across the region, so you will need to check whether retiring to these locations will mean your pension continues to rise in line with increases in the UK, or will be frozen when you move overseas.

Italy is a country of contrasts, so anyone planing a retirement there needs to think carefully about whether they want to call a bustling city home, or whether they would be happiest in the mountains or by the sea.

Housing tends to cost less than in the UK, and in some regions it's incredibly cheap. Living costs are also lower than in Britain, and your pension will rise in line with increases in the UK.

Canada is a big draw for British expats of all ages. This spectacular country is known for being welcoming to people from all over the world, and in many cases has no language barrier for Brits. The quality of life is high, and the cost of housing lower than in the UK.

However, you will need to factor in the fact that your UK state pension will be frozen on the day you leave, and you will need some health insurance if you want to replicate the sorts of things that are available for free on the NHS.

As with India, the Far East offers an exciting and dramatic change from life in the UK, with much lower costs, which can buy you a higher standard of living (although bear in mind your state pension will be frozen).

You will need to consider the cultural and practical differences associated with the move, but you will have the opportunity to live in one of the most exciting places in the world.

The weather, lifestyle, space, and lower cost of living means that British expats of all ages are keen to move to Australia.

Property can be a bit of a stumbling block in some areas, as prices have gone up so much. The currency is also strong, which has posed some issues for those who receive their income in pounds, and there’s the fact that the UK state pension will be frozen if you move. However, if you can overcome these things, then a new life in the sun awaits.

The US offers much more affordable housing, and in many respects a lower cost of living than in the UK.

It appeals to those who don’t want to live with a language barrier, but want more space, possibly more sun, and an American Dream of their own.

There are some important things to factor in before you move, such as the additional cost of healthcare, and the exchange rate. However, one bonus is that your state pension will rise at the same rate it does in the UK.

France is close to home, and yet offers cheaper accommodation than the UK, a lower cost of living, and in many regions there’s better weather too.

Your pension will rise at the same rate it would in the UK, and at any time friends and family are just a short boat or plane ride away. It’s no wonder France is the second most popular dream destination for retirees.

It will come as little surprise that Spain tops the list - largely because it’s already the most common overseas retirement destination for Brits.

Millions of us have experienced the delights of the sun, sea, and the lower cost of living while we were on holiday in the country, so it’s hardly a shock that so many want to experience it on a full-time basis in retirement.

Huge falls in the price of property has made this a cheap place to buy, and the fact that your state pension will keep pace with rises in the UK means you’ll be able to maintain your standard of living throughout your retirement.

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