Tackling pensioner poverty: How to get everyone the income they should have
At Independent Age, we believe everyone in later life should have a decent income. Phil Mawhinney, Policy Manager, explains more.
The fall and rise of pensioner poverty
Many people think pensioner poverty is no more. It fell from a high of nearly 1 in 3 older people (29%) living in poverty in 1997, to 1 in 8 (13%) in 2012. Real progress; with many people receiving a decent income in later life.
But progress stalled, then reversed.
Around 1 in 6 (18%) are now below the poverty line in later life — more than 2 million people.
What’s worse, social trends, such as the fall in home ownership in later life, could mean even more people struggling in future.
A bleak retirement could be on the horizon for many. Years of struggling to afford the basics, wearing hats in bed, boiling the kettle once a day, skipping meals — all things people tell us about when they call our Independent Age helpline.
Solutions — ways to achieve a decent income for all
No-one wants this reality for themselves or their loved ones. Thankfully, it’s possible to avoid the worst of this. There are solutions available, if policymakers have the will to enact them.
At Independent Age, we listen to people’s stories and develop policy solutions to increase older people’s income, reduce their costs and make their housing affordable, safe and secure
When thinking about income, there are three areas where action can give everyone in later life — particularly current pensioners — a decent income:
- Ensuring everyone receives the benefits they are entitled to.
- Ensuring the State Pension and social security payments are enough to meet people’s needs.
- Ensuring the rising State Pension age doesn’t increase financial hardship.
1. Everyone should receive the benefits they are entitled to
a) Pension Credit uptake
Anisah, who worked as nurse for many years, told us how Pension Credit — a means-tested benefit — changed her life:
“I really don’t know why I got a lower pension. I was hungry sometimes…I even wore a hat at night so I could keep myself warm…I’ve been receiving Pension Credit for ten years and it’s a whole new way of life. I could eat better, therefore be healthier, I could be warmer.”
We have been drawing attention to the troubling fact that many people — up to 850,000 according to the last official statistics — should be receiving it but aren’t.
While this number has likely fallen, we don’t know by how much. Nor do we how many newly retired people in future will be eligible.
So, we continue to call on the Government to produce a Pension Credit uptake strategy, to give this issue the detailed focus and sustained priority it needs.
b) Uptake of other benefits
People aren’t just missing out on vital income from Pension Credit. Many are not getting other money they are entitled to, such as Attendance Allowance and Council Tax Reduction.
For example, we supported a woman who called our helpline, establishing that she was eligible for Pension Credit, Attendance Allowance and Council Tax Reduction. She was eventually awarded around £600 per month extra income. She told us: “It was a big relief. My prayers were answered.”
We celebrate such successes — lives changed — but there will always be others who don’t know where to get support and so continue to miss out.
Our recent briefing gives practical examples of how local authorities are supporting older residents to receive all their entitlements.
We are calling on the Government to help councils conduct more of this income maximisation activity, through improved resourcing and data sharing.
c) Eligibility for, and access to, social security
It’s also important that these financial entitlements are available to everyone who is struggling.
We are hearing more and more from people who just miss out on benefits.
For example, being ineligible for Pension Credit by a couple of pounds can mean people miss out on over £3,000 a year, plus other linked support — e.g. with rent, health and energy costs — that can be worth thousands more.
We also hear from people completely unaware of the benefits available, or struggling with the application process.
And while local welfare assistance schemes can provide direct, time-limited help to get people through a crisis, many older people miss out on that support too.
While there are no easy answers in a complex social security system, that system should:
- Be accessible to all, especially people with health problems or other challenges.
- Provide a smooth transition for people reaching State Pension age.
- Offer support or information to people who just miss out on being eligible for payments.
- Be updated to reflect inflation and social change.
2. The State Pension and benefits should be enough to meet people’s needs
While most people have multiple sources of income in retirement, a significant proportion only have the State Pension and benefits. Indeed, 1 in 8 (13%) pensioner households — this includes both couples and individuals over State Pension age — has no other income, rising to 1 in 5 (20%) single pensioners.
A full new State Pension is worth £10,600 a year. But the vast majority of current pensioners (86%) receive the old State Pension, often worth less (but also more complex). Many people don’t have full National Insurance Contribution records, so get less than the full amount for either. Women are more often in this situation than men, and generally have much lower pension incomes.
It’s complicated! But the key point is that many people only get the State Pension and are seriously struggling — especially with the high cost of living.
In recent polling, a large majority of respondents (87%) of all backgrounds said they would find it ‘very or fairly difficult to support myself’ on £10,600 per year (a full new State Pension).
At Independent Age, people tell us about the intense pressure on their limited income. One person we spoke to, Christine, shared that even before the cost of living shot up in early 2022 she was finding things difficult:
“The prices of everything, food shopping, bills, everything are just rocketing at the moment. I’m just hoping that it will flatten out into next year sometime because I don’t know how long we can go on like this.”
Independent Age is calling on the Government to conduct a cross-party process to establish an adequate minimum level of income needed in later life.
Until then, the Government should retain the State Pension triple lock to maintain the value of the pension and keep as many people as possible out of financial hardship during the cost-of-living crisis.
3. The rising State Pension age should not increase financial hardship
Finally, the State Pension age (SPA) is rising. It’s currently 66 for men and women, and is scheduled to rise to 67 by 2028 and 68 by 2046.
The Government faces pressure to bring forward these rises so they happen earlier, and it conducted a review exploring this idea in 2022/23. Independent Age contributed evidence, sharing our concerns that the previous rise from 65 to 66 led to an increase in financial hardship among people having to wait longer for their State Pension. It was a relief when the Government confirmed no changes would be made in this parliament.
Yet the reality is that rises will happen sooner or later. Indeed, the Government will review the issue again, potentially as soon as 2026. At this point it could speed things up or even raise the SPA higher than 68.
Many people approaching SPA face financial hardship. Illness, disability or caring responsibilities mean they struggle to get by until they can access their State Pension — a safety net for many, particularly those with little, if any, private savings.
Prof Sir Michael Marmot recently said: “If 68 becomes the new pension age, 60% of men never reach that age without a disability that prevents them working.”
That’s why at Independent Age we think it’s so important that government policy focuses on people who are most disadvantaged and how they can be financially supported.
We’re calling on the Government to enhance income support for people approaching SPA who are on a low income and unable to work.
A decent income for all
These solutions are not cost-free but they would help achieve an important goal — that everyone in later life, now and in future, can afford the basics and live with peace of mind rather than in a constant state of anxiety.
As well as helping each individual facing financial hardship in later life, taking people out of poverty improves their health and reduces pressure on public services like the NHS.
With positive action, we can stop the rise in pensioner poverty and put it into reverse.
If you have experienced difficulties getting by on your State Pension and want to share your story, please contact policy@independentage.org.
If you would like to support our campaigning on these issues, please join us!
If you need support or advice, Independent Age has free online information, along with guides that can be sent to you, telephone advisers and a free helpline you can contact on 0800 319 6789.
