With the first decade of this millennium having now passed us by, it is a good opportunity to reflect on what we have achieved during this period. Ending pensioner poverty was a central goal for both Age Concern and Help the Aged, and continues to be so for Age UK. So, how far have we come in achieving this, and where do poorer older people stand now in 2011?
In 1997, there were 2.9 million pensioners living in poverty, after housing costs. This number decreased in the first part on the decade, but has since stalled at around 1.8 million and even rose to 2.1 million in 2007. However, when this is looked at before housing costs are taken into account, the number of poor pensioners is 2.3 million – not a lot lower than when Labour came to power.
New research from Save the Children has found that families on low incomes are paying nearly £1,300 more each year for basic goods and services than the better off. This figure has increased from £1,000 since 2007. Much of this ‘poverty premium’ is composed of additional costs paid by people on lower incomes for fuel – a particular concern for many older people.
Do these figures, therefore, indicate we as a country aren’t doing enough to tackle poverty? At present between £3.16 billion and £5.43 billion of income-related benefits are unclaimed by pensioners every year. If all means-tested benefit entitlements were taken up, around 700,000 pensioners would be taken out of poverty.
But, even if we can improve take-up, there are likely to still be problems with means-testing – such as complexity, negative feelings towards means-testing and disincentives to save. Many instead advocate that we should be moving to a system where people have a sufficient income to live on in retirement without having to resort to means-tested support.
Only a minority of current workers are contributing into a private pension (40% of men, and 32% of women). To encourage pension saving, starting from 2012 the Pensions Act 2008 requires employers to automatically enrol all employees earning above a minimum amount into either a qualifying workplace pension, or the new National Employment Savings Trust (NEST), a defined contribution scheme which is aimed at people on low and modest incomes.
The Pensions Bill, which we’re expecting to be published this week, could be a real opportunity for the Government to help tackle poverty among pensioners – both current and future. But it’s likely that the Bill will contain measures to move forward the date at which the State Pension Age rises to 66, hitting the poorest the hardest by shortening retirements where life expectancy is lower and denying people the opportunity to plan in a timely way for their delayed retirements. At Age UK, we’ll be working to keep pensioner poverty high on the political agenda.