Have the older generation benefited at the expense of the young?
As of last month, we have a new State Pension system which is expected to reduce pensioner poverty and raise low income levels, especially for women. Meanwhile, the Work and Pensions Committee is taking evidence on the question of Intergenerational Fairness – have the older generation benefited at the expense of the young?
We know that average incomes of pensioners have risen in the last 15 years and poverty has fallen, meaning that policies like the ‘triple lock’ and Winter Fuel Payments have come under criticism.
So, have pensioners really never had it so good? On the basis of the above, you could be forgiven for thinking so. But the current debate is in danger of overlooking the experiences of older pensioners. At Independent Age, we have just published a new report, The Overlooked Over-75s. Our findings show that older pensioners, aged 75+, who will not receive the new State Pension, are also on average less well-off than younger pensioners and working age adults and more reliant on benefits. In fact, for over 75s, average incomes have not increased since 2010.
Working with Dr Matt Barnes from City University, we analysed data from the Family Resources Survey to understand differences in the financial circumstances of groups of older people. We know, of course, that income inequality does not end at retirement. The richest pensioners have incomes which are four times those of the poorest pensioners. At the same time, older pensioners are more likely than younger pensioners – the Baby Boomers – to be living below the poverty threshold.
Older women and single people are most likely to be living on a low income. There is a big overlap between these two groups – three quarters of the 2.5 million single older pensioners are women. Women of this generation, born before the Second World War, were much less likely to have paid employment and to save towards pensions. Add to this the impact of divorce and bereavement, and they are considerably worse off than men of the same age.
Among the 1.8 million older (75+) single women in the UK, average income after housing costs is just £209 a week and 40% of them are claiming income-related benefits. On top of this 30% have no savings at all. The combination of low income and nothing to fall back on can create a huge strain and anxiety about managing financial demands, with little or no prospect of the situation changing in the future. The ‘triple lock’ on the State Pension may be seen as generous in policy terms, but that only translated into an increase of just over £3 a week this April (up to £119 a week).
That is why pensioner benefits like Pension Credit are so important, but the take-up rate of Pension Credit is infamously low, with 750,000 over 75s not claiming it when they are entitled to do so. Pension Credit annual increases are lower than the ‘triple lock’ and other pensioner benefits, including Attendance Allowance, were frozen this year.
We can’t abandon older pensioners just because we feel we’ve ‘fixed’ the pension system for new pensioners – who now have access to a new State Pension system. We must also fix the problem of low Pension Credit take-up and make sure that older pensioners, who have very limited chance of increasing their income, are not forgotten. In particular this group must not be penalised as a result of Government backtracking on past policies – like the ‘triple lock’ – which have helped to reduce poverty levels.
Policy and Research Manager
Independent Age: the older people’s charity that offers clear, free and impartial advice on the issues that matter. A charity founded over 150 years ago, we’re independent so you can be.