Means testing could make things worse for those that need help most

It seems incredible that, in the name of cost saving and to prevent a few well off pensioners from receiving some pretty modest benefits, ministers can be entertaining the idea of extending means-testing.

Making people apply for benefits they are entitled to is notoriously inefficient. Pension Credit is not claimed by about 30 per cent of those eligible and Council Tax Benefit by about 40 per cent. When Gordon Brown refused to increase the state pension above the rate of inflation (with a freakish inflation figure in 1999 leading to a 75p increase), he argued that a means-tested Pension Credit was the efficient answer.

However, even he exercised a balance, by making the Winter Fuel Payments universal and restricting the free TV licence to the oldest – who are demonstrably the poorest part of our none-too-wealthy older population, and of course a means-tested claim costs ten times as much to process as an automatic one.

Bizarrely this proposal is surfacing as the ONS publish figures on the poverty risk facing older people ion the UK and the EU. It turns out, according to their figures, that older people in the UK are faring worse than their counterparts in most of the rest of Europe.

There are more than enough poor pensioners struggling with energy bills and food price inflation to maintain some parts of our benefit system which actually get help to them.

Some older celebrities were proud to proclaim last winter that they were donating their Winter Fuel Payment to charity – that is fine and that is their right. It is hard to imagine many of the seriously rich pensioners on the buses with their passes.  Continue reading “Means testing could make things worse for those that need help most”

Is retiring comfortably a thing of the past?

Since the early 1990s the numbers of people working past State Pension age (SPA) has been continuously on the rise. Although people choose to continue working for a variety of reasons, perhaps the most important is simply ‘for the money’.

However if this is why people keep working, for some it will never be enough.

A whopping 45% of those currently aged 50+ and in employment will have to work for at least 11 years beyond their SPA in order to attain a level of retirement income which maintains their standard of living.

And of course many may never reach this marker – for such people retiring will necessarily mean a drop in living standards.

This is the result of new research by the Pensions Policy Institute (PPI), sponsored by Age UK and three other organisations.

The research sets a level of income estimated to bring the equivalent standard of living in retirement, and then poses the simple question: ‘how long will people need to work to reach this?’

The following chart is taken from the report:

PPI chart on replacement rate by SPA

This could have important implications for a variety of reasons.

For example, it indicates that many people will want (or need) to keep working for longer than they may have anticipated. This impacts on individuals who may have to rethink plans for retirement, and provides a further imperative for employers to become more age-friendly.

Also, many people will not be able to work for this long. This is obvious for people who suffer from ill health, but also many who lose their job – even in good health – will find it difficult to re-enter the workforce due to ageist attitudes from employers.

However, the report also looks at the numbers of people attaining a minimum income standard – unrelated to their lifetime earnings – by the time they reach SPA. Happily, the numbers here are much higher (85%), but clearly many people will not be able to continue the same lifestyle if they have such a reduced income.

The research highlights issues facing people both sides of State Pension Age, and shows clearly just how uncertain the future can be without good employment and pension provision.

The full report is available on the Pensions Policy Institute website, and makes for a very interesting read.

Last year Age UK’s More Money in Your Pocket campaign helped 500,000 people put £120 million back in their pockets through free benefits information and advice. This year, we will continue to break down the barriers that prevent people from claiming. For more information, please visit www.ageuk.org.uk/moremoney