Fighting pensioner poverty… what’s the score?

Last week I opened the Inside Government conference on the future of UK pensions, with a presentation on tackling pensioner poverty. With Steve Webb as a fellow panellist I described  the human impact for the poorest of our inadequate pension system; ‘scored’ current public policy; and set out Age UK’s policy ‘wish list’.

Older person - Photo: Hoveringdog via Flickr

Photo: Hoveringdog via Flickr

Pensioner poverty remains a massive issue across the UK. The stereotype of the rich ‘baby boomer’ means that we often think of older people as wealthy homeowners with significant disposable income. For some, this is true, but income inequality within the older cohort is rising steadily.

Over 1.8 million people over 65 live below the poverty line of just £119 per week for a single person. Those most likely to be poor in later life include single women, people from black and minority ethnic communities and the ‘oldest old’ – people currently in their late 70s and upwards. The poverty among many older people is too often exacerbated by benefits being left unclaimed. Somewhere between £3.6bn and £5.4bn in means-tested benefits for pensioners goes unclaimed every year. 

Kicking off my score-card, I reviewed the policies in place for today’s poorer pensioners and praised both the current and previous governments for recent initiatives. The key policies are the indexation of Pension Credit to earnings, by Labour, and the Coalition’s early introduction of indexation for the Basic State Pension, with their ‘triple lock’ guarantee.

On the downside, I flagged the possible long term consequences of some of the financial decisions made in the last few months. For example the indexation of the State Second Pension and private pensions to CPI, rather than the generally higher RPI, will mean that overall pension incomes will be significantly lower than would otherwise have been the case in decades to come. For a group of the poorest pensioners, proposed changes to Housing Benefit and future social housing rents could have significant consequences too.

Turning to policy for future pensioners, there has also been real progress. The 2010 reforms to state pension entitlement, introduced by Labour, and the Coalition’s confirmation that we will proceed with auto-enrolment into workplace pensions are both huge steps forward.  The silent rise of the grey labour market over the last 15 years perhaps matters just as much. It is really good news that the recession has not dented that progress too much, and we hope that the promised end to forced retirement next year will provide another boost.

Notwithstanding all this positive news, I emphasised that major risks remain with employer pensions; we still have a long way to go to ensure everyone on a low and mid income has access to a secure, value-for-money pension, with reasonable employer contributions.

Finally, I looked at the proposals for further reform emerging from the Government this Autumn. The floating of a single state pension for everyone who qualifies, of around £140 per week, has attracted huge excitement from all parts of the pensions world. It would avoid the need for most of today’s means testing and would provide a solid platform for people of all ages to save.

My caveat is that we also need to remember that a 61-year old woman who retired in 2009 will be with us for decades to come, and should not be left too far behind as improvements are made for future generations of pensioners.  We will also need to be wary if the quid pro quo of the single pension is a faster increase to the State Pension Age. While the logic of gradually increasing pension ages to reflect life expectancy is sound, policy makers will need to avoid raising the pension age at a rate that means people from poorer communities can not enjoy more years in retirement with good health.

In Age UK’s view the recent announcement that SPA will rise between 2018 and 2020 was too fast; it will leave a 56 year-old women, who previously would have drawn her pension at around 62 (and possibly expected to receive it at 60) now not receiving payment till around 64. To us, that feels like a significant disruption to retirement planning for someone so close to 60.

10 responses to “Fighting pensioner poverty… what’s the score?

  1. As there is an Age Scotland, an AGE NI and an Age Cymru and as Age “UK” is actually AGE England should we assume these stats apply to England? Or the UK?

    And isn’t AGE UK failing the elderly of England by not representing them directly? After all they face particular hardships in having to pay for care and facing selling their homes for residential care that do no apply in certain other home nations?

    • The topic of pensions is a perfect way to illustrate why we are Age UK not Age England. Pensions and incomes policy is reserved to Westminster and covers the whole of the UK – and Age UK represents people in all four nations on this topic. Meanwhile on issues such as the NHS we cover England only, leaving our colleagues in Age Cymru, Age NI and Age Scotland to lead in their respective nations. We do our very best to work for people in later life in England, and across the whole UK, depending on the responsibility of the Westminster parliament and government, issue-by-issue.

      You raise an interesting point about the interactions between a UK-wide welfare system and differences in public service entitlements in each nation… and of course the costs of living vary for older people in all sorts of way, up and down the country. Perhaps something for future research?

      • “The topic of pensions is a perfect way to illustrate why we are AGE UK not AGE England. ”

        One issue, pensions does not make this arrangement perfect. Perfect we’re not going to get what ever but this arrangement appears to me like blatant discrimination.

        This looks to me like as far as AGE are concerned the elderly of Scotland, Wales and Northern Ireland deserve their dedicated “AGE” teams but the elderly of England do not.

        Which of course would match the blatant discrimination of the “UK” government that funds the people of England old and young the least via the deeply unfair Barnett Formula. Leading to outrages like my 83 year old and severely disabled mother paying £500 a month for visiting care that would be free in Scotland and who faces having to sell her home if she has to go into residential care – also free in Scotland.

        “We do our very best to work for people in later life in England, and across the whole UK, depending on the responsibility of the Westminster parliament and government, issue-by-issue.”

        By following the structure of a UK parliament that ignores England, AGE UK also ignores England and the elderly of England as well.

        Or to put it another way – wouldn’t you be able to make a much stronger case if you had an AGE England campaigning for equal rights for English elderly.

        “Meanwhile on issues such as the NHS we cover England only, leaving our colleagues in Age Cymru, Age NI and Age Scotland to lead in their respective nations. ”

        Doesn’t the respective nation of England also deserve a dedicated team? Don’t English people deserve exactly the same as Scottish, Welsh and Northern Irish people?

        “You raise an interesting point about the interactions between a UK-wide welfare system and differences in public service entitlements in each nation… and of course the costs of living vary for older people in all sorts of way, up and down the country. Perhaps something for future research?”

        Does it need further research? The inequalities are staring you in the face. What are you doing about them? Why are you allowing the UK government to discriminate against the elderly of England?


        Can you also please clarify whether funds raised for “Age UK” are spent across the UK or only in England?

  2. At the moment people on Pension Crediti/ncome support use this proof of an officlal letter, to obtain Housing Benefit, Council Tax reduced, Fares to Hospital, Council Grants, Government Grants, Animal Chairty Vetinary Help.

    If everyone receives £140 regardless of the fact that they may have additional incomes of private pensions, how can the poorest pensioners just on the basic pension obtain the above benefits, as they will have an official letterl showing they are just on the basic pension/top up?

    Each individual benefit authority will not be able to means test the pensioner and the pension will have no letter showing they on the basic pension as ALL pensioners will then receive the same penson regardless of how much extra income they have via additional pensions or savings, etc.

    Therefore the poorest pensioner will be suffering still. How will they be able to get these benefits which at present are easy to obain by showing proof by ones official letter of Pension Credit/income support.

    Have they thought of this?

    • This raises a really important issue about targeting support. In general most people would want to see a reduction in means-testing yet for some people a higher state pension could bring them just above the level for benefits such as pension credit and if they lose linked support they could be little or no better off. At Age UK we believe that a higher state pension for both current and future older people is needed to address some of the problems of having a system heavily reliant on means-tested support – such as low take up and savings disincentives – but reforms must ensure people on low incomes are better off overall.

  3. I have tried to get an estimate from the DWP as to how much pension would be passed to my wife from my SERPS pension in the event of my death.
    No-one can tell me !!!!!
    I find it incredible that my SERPS should be stolen from me( the whole of the SERPS was meant to be passed)and now no-one can explain how much will be taken back although Barbara Castle in a radio broadcast stated there was more than enough in the fund to allow for this ,but successive Governments had robbed the fund for other purposes.
    If a private firm had used these methods thye would have been taken to court.

  4. It is agood if rather rose-tinted view of the latest policies but the £140 pension is an illusion for todays pensioners. Persionalisation and the CPI link are only bad news for most older people.

  5. Age Scotland, age NI, age Cymru, age UK, where is age England? you have had the thoughtful idea of giving the Welsh people their name in Welsh,but can not give the English her name at all ,the English are bunged in to UK, That means every one in these Islands does it not? Something wrong here!

  6. If the topic of ‘pensions is a perfect way to illustrate why we are Age UK not Age England’ it is difficult to see from Andrew’s explanation why in fact Scotland, Wales and NI must have their own Age organisations. Isn’t this simply duplication that we would do well to get rid of or, alternatively, let Age UK become Age England? No problem for me – I can retire to Scotland – but I do notice, living in England, how so many agencies, quangos, supermarkets etc seem to decided to ignore England in favour of the generic ‘UK’ or ‘GB’. One sometimes gets the impression that Scotland has already left the UK and that England is not in it at all. England is not the UK nor is the UK England. Believe me, this annoys the Scots as much as does some of the English. In Scotland, the ‘British’ Broadcasting Company is popularly known as the English Broadcasting Company. Looks to me like some rationalisation is needed.

  7. If someone in Scotland gives money to Age Scotland is that money ring-fenced for spending in Scotland?

    I’m presuming that money that goes to Age UK is for the benefit of everyone in the UK.

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