Half of the state pension is lost to energy bills

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Rising utility bills will eat up nearly half of the annual state pension next year, forcing millions of retirees into poverty.

In the average home, gas and electricity will cost £3,729 a year from April, experts at Cornwall Insight estimate this week, up from the current £1,971 a year.

By next spring, up to 46 per cent of state pensions are expected to go directly to home heating, as the average pensioner on basic benefits receives £8,185 a year. Until October last year, energy costs were only 17 percent of the average state pension.

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The Winter Fuel Payment will double from £300 to £600 for more than eight million retired households this winter. However, this only covers one sixth of the average annual energy bill.

Rebecca O’Connor, of stockbroker Interactive Investor, said the growing portion of retirees’ income consumed by utility bills has become unsustainable.

“The pressure it puts on the household budget, especially as food prices are also rising, will simply be impossible to manage over the winter and next spring,” she said.

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Even retirees who live together pay a third of their combined state pension income on utility bills, according to Age UK.

Caroline Abrahams, of the charity, said the astronomical rise in bills had created a “terrifying situation” for those dependent on the state pension.

“Keeping warm is very important for older people — it’s not just a matter of avoiding discomfort, for people with serious health conditions it can mean the difference between life and death,” she said.

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Annual energy bills are expected to be £1,388 higher from October alone, an increase that will cost more than two whole months in the average pension payment paid by the government.

Four in ten people over 66 depend on the state pension as their main source of income, according to the government agency’s Money and Pensions Service.

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