As pension poverty rises, it’s clear: preparing for later life is more crucial than ever
For some, the UK is an increasingly hard place to grow old, with one in six pensioners (2.1 million) living in poverty. While average incomes for pensioners have grown by 12-13 per cent since 2011, it was only five per cent for poorer pensioners, according to the Institute for Fiscal Studies (IFS).
Campaigners and support agencies are calling for change. They highlight poverty, inequality and discrimination as policy issues in employment, health and housing, not just for pensioners, but those approaching retirement age too. What challenges are they facing? What needs to change and what is coming on-stream to help?
Earnings and private pension incomes have steadily increased since 2011 but poorer pensioners, however, did not share the spoils. In fact, increases to state pensions triggered reduced eligibility for means-tested benefits.
While on average, more people are living into their 90s, the gap between UK’s poorest and richest pensioners is widening. Poverty rates for 60-64 year-olds are the highest among UK adults. Many approaching retirement are therefore poorly-equipped for a transition to older age with a much higher likelihood of ill-health and financial hardship.
In England, men from most deprived postcodes have an average life expectancy ten years younger than in the least deprived areas, living on average 73.5 years. For women, the difference is eight years, reaching an average life expectancy of 78.3 years. Not only do people on lower incomes live shorter lives, they also spend many more years in bad health.
John McGeachy, from Age UK London, explained to Quids in! how inequality persists: “Older people that live alone, those that rely on just the Basic or New State Pension, women, social tenants, those that have a disability or long-term health condition, those from some minority ethnic backgrounds or are LGBTQ+ are just some of those that experience higher rates of poverty.”
Current Trends and Challenges
Ethnicity plays a major factor in health inequalities. The Centre for Ageing Better reported that Bangladeshi women aged 50-64 report the same level of poor health (22%) as White British women aged 85 and over. The Senior Evidence Manager at the Centre, Dr Aideen Young, said, “The effects of disadvantage snowball throughout people’s lives – meaning inequality is greatest in later life. And as society becomes more diverse, the inequality we see today is likely to grow.”
Low-income pensioners experience significantly worse health outcomes. For example, they are four times more likely to die prematurely from cardiovascular diseases. Additionally, disability rates among 50-year-olds in the most deprived areas are comparable to people who are 25 years older in wealthier areas.
“Poverty can be both a cause and a result of poor health,” John McGeachy told Quids in!, “and in our 2023 report on the experiences of older Londoners, research respondents with a disability or long-term health condition were much less likely to say they were ‘satisfied’ with their finances (50% vs. 67% satisfied).”
Sub-standard homes can exacerbate health inequalities, as inadequate facilities and repairs often mean poor insulation, safety hazards, and increased risk of injuries. Almost half (two million) of people living in non-decent homes are aged 55 and over.
“Housing is an area where we see a strong correlation with poverty”, John McGeachy continued. “In 2021-22, nearly half (46%) of all social tenants over 50 in London lived below the poverty line, compared with 18 per cent of those that owned their home outright.”
The number of older private renters is at an all time high. Their additional challenge is meeting soaring rental prices while on a fixed income.
One in five economically inactive people aged 50-64 would like to return to work but cannot due to long term sickness. Others struggle to find work as a result of caring responsibilities, age discrimination, and lack of support services.
Digital barriers exclude some from the workforce, with one in three people aged 65 and over struggling to use the internet because they don’t know how to or they cannot afford it. This can also limit access to the pension system, as can disabilities, poor literacy or English as a second language.
A Fairer Future
The Centre for Ageing Better and Age UK are urging the government to create policies that safeguard older populations. Both groups advocate for the establishment of a Commissioner for Older People and Ageing to address inequalities.
They say investing in local public health services and introducing a Bill of Health would help reduce huge disparities in life expectancy addressing not only health, but also employment and housing.
Making all new homes accessible and developing a national plan to fix cold and dangerous homes would enable more people with ill health and disabilities to live safely and independently while preventing illnesses associated with poor housing.
Boosting income through a combination of government support and employment initiatives is crucial for reducing pension poverty. Research commissioned by Independent Age shows that increasing Pension Credit uptake could lift 400,000 older people out of poverty. Implementing targeted programmes to help individuals return to work would also prepare people for a more comfortable retirement.
Lily Megson, Policy Director at My Pension Expert, highlighted the need for employers to do more to educate and support people with retirement planning. She added: “The government must do much more as well, not just by helping UK adults to understand and maximise their pension benefits, but also by opening clear pathways to financial advice, ensuring people have accessible resources to make informed decisions about their retirement plans.”
John McGeachy also highlighted the importance of thinking ahead: “Planning for later life means thinking about housing options, income, how long someone wants to work, caring responsibility, health, family and social networks and much more. It’s crucial that people have more information about what they can expect, including their rights and entitlements, so they can make the best decisions for them.”
Quids in! Money Guidance recently launched its new ‘Ageing Well Quiz’ designed to assist individuals on low incomes in preparing for a healthier and more secure retirement. The interactive digital app aims to close the information gap that often contributes to the ten-year life expectancy disparity experienced by those in lower income brackets. Click here to find out more.
As our population ages, it is crucial to prepare individuals for their later years well in advance, ensuring they have access to comprehensive information, resources and support to secure a comfortable life. Additionally, policies must reflect the diverse needs of this demographic to effectively address varying requirements and prevent a rising number of pensioners from living below the minimum standard of acceptable living.
Image: StanislauV / Shutterstock
