Written evidence submitted by the Independent Age PPCM0020

Executive summary

It is unacceptable that anyone should live in poverty. Poverty is detrimental to our society as a whole and every day, it deprives people of their choices, forcing them to make difficult decisions that can negatively impact their health, relationships, and dignity. Older people are not immune to financial hardship. Across the UK, 16% of pensioners are in poverty. This is approximately 1.9 million older people and another million are living in low income just above the poverty line.[i] In reality this means cutting back on meals, living in damp, cold homes and sitting in the dark to save money. The number experiencing material deprivation is rising, from 6% of older households (700,000 people) in 2019/2020 to 8% (1 million people) in 2022/2023, meaning that more are struggling to have at least one filling meal a day, to afford basic items or pay their regular bills[ii].

This problem is not going away. Research we commissioned from the UK Collaborative Centre for Housing Evidence showed that if no policy interventions take place the number of older people in poverty could go from around 2 million now, to 4 million by 2040, mainly due to a steep rise in the number of older renters.[iii]

Too often, older people in poverty are ignored or stigmatised, compounding their feelings of shame, hopelessness and isolation. Too often, their voices aren’t heard or acted on by those with the power to make change happen and we welcome the committees decision to use their influence to shine a spotlight on this important topic. Having enough money for a decent standard of living and a dignified life is denied to too many older people. We believe the UK Government needs to take action to ensure that the social security system is adequate throughout the life course, including post-state pension age; not only to prevent poverty, but to ensure older people can maintain their dignity.

The first step would be to create consensus on what an adequate income in later life is. Independent Age recommends that the UK Government initiates a cross-party process to establish an adequate level of income needed in later life to avoid poverty and puts plans in place to ensure everyone receives it. We also recommend the UK Government legislates to create and appoint an independent Commissioner for Older People and Ageing who would champion the needs of older people, including those in poverty. 

Alongside this, immediate action to address poverty among older people should include:

• UK Government ensuring higher take up of social security entitlements by producing a strategic action plan to increase the take-up of key benefits older people on a low income are eligible for including Pension Credit, Housing Benefit, Attendance Allowance and Council Tax Reduction.
• urgently uprating Local Housing Allowance for people who privately rent to ensure it covers at least the rent of the cheapest 30% of the local private rental market, and to ensure that it is uprated annually to reflect changes in rents.
• ensuring utility companies have social tariffs and discounts in place to support those on a low income and more proactively promote them, targeting areas of deprivation and all eligible groups, including older people who receive Pension Credit. The UK Government should also introduce national social tariffs for both energy (across the UK) and water (in England and Wales).   

Poverty in later life is not inevitable; it can be addressed. Together, we can improve our society and social security system so that it works for people of all ages, including those in later life.

About Independent Age

Independent Age is the national charity focused on improving the lives of people facing financial hardship in later life. Our Helpline and expert advisers offer free, practical support to older people without enough money to live on. Through our grants programme, we support hundreds of local organisations working with older people across the UK. We use the knowledge and insight gained from our support services and partnerships to highlight the issues experienced by older people in poverty and campaign for change. We believe no one should face financial hardship in later life.

Throughout this response, comments from older people which have been provided to Independent Age are included in italics. These are from interviews, responses to our surveys and other engagement events with older people.

What is the state of pensioner poverty across the UK?

Which groups are most likely to be affected? 

16% of pensioners are in poverty[iv]. This is approximately 1.9 million people.

Change over time

From highs of almost 30% in the mid-late 90’s, the introduction of Pension Credit in 2003 amongst other measures resulted in a steady decline in levels of pensioner poverty in the UK. However since 2010 the decline halted, and poverty began to climb again as Pension Credit and the State Pension began to lose real terms value over time.

In 2022/23 Households Below Average Income statistics (HBAI), it looked like poverty in later life had slightly decreased from 18% to 16% or 1.9 million people. However this was due to the temporary Cost of Living support being included as ‘income’ within the data used for the 2022/2023 HBAI statistics. If this temporary support is omitted from the data, pensioner poverty is estimated to be at 18% or 2.2 million.[v] The table below, bearing this in mind, would show a stagnation since 2019/20 at 18%.

The picture for poverty among older people in the future depends on the interventions made now. Our research – ‘Keys to the Future – found that if poverty levels among people over 65 continue to change with year-on-year trends since 2010, pensioner poverty will increase to 23% - from 2.1 million people in 2022 to 3.9 million in 2040.[vi]

In the short term, the recent decision by the UK Government to end Winter Fuel Payments for all older people unless they are receiving Pension Credit, or a small number of other means-tested benefits, will have an impact on poverty in later life. UK Government estimates state that, compared to the numbers that would have been in poverty, an additional 50,000 pensioners will be in relative poverty after housing costs in 2025, 2026 and 2028, and an additional 100,000 pensioners will be in poverty in 2027, 2029 and 2030 as a direct result of the change (please note, numbers are not cumulative).[vii]

Groups more at risk of poverty in later life

You are more likely to be in poverty in later life if you are:

• Single - 22% of single pensioners are in poverty compared to 13% of pensioners in a couple.
• Female - particularly an older female. 23% of women over 85 are in poverty.
• A private renter - 35% of private renters are in poverty, compared to 12% of owner-occupiers.
• From a racially minoritised group - 26% of Black pensioners and 25% of Asian pensioners are in poverty compared with 16% of White pensioners.[viii]
• A carer – 20% of carers over 65 are in poverty compared to 13% of non carers.[ix]
• Have a long-term health condition or disability - 19% of older people with a disability are in poverty whilst it’s 14% for those who aren’t.

This demonstrates the importance of an intersectional approach to tackling poverty in later life as many older people belong to multiple groups and face compounded difficulties or risks of poverty as a result. More details on the drivers behind poverty in these groups is included as Appendix 1.  There is also more information in our report ‘The Hidden Two Million’[x].

Regional variations

There are regional variations in levels of pensioner poverty within England.

• 19% of Londoners over State Pension age are in poverty – this rises to 27% for Inner London.
• 20% of pensioners in Yorkshire and The Humber are in poverty.
• Pensioner poverty is at 15% in both the South West and the East Midlands.

There is a smaller amount of variation across the nations, where pensioner poverty is:

• 17% in England
• 16% in Wales
• 15% in Scotland
• 14% in Northern Ireland

There are a range of reasons for these variations, which include a wide variety in housing costs, social and economic divisions, and historical low wages.[xi]

As we outlined in our report ‘No Place for Older Renters’, the local authority areas of England with the highest proportions of older people in private rented housing are in London and coastal areas. Blackpool (14%) and Westminster (13%) have the highest proportions of older households in private renting, followed by Hastings (12%), Kensington and Chelsea (12%) and Torbay (11%).[xii]

Wealth and savings

Inequalities

Wealth distribution is extremely unequal within the group above State Pension Age, with higher levels of inequality within this group than within the group of those of working age. However, public perception of the wealth held by everyone in the older generation, and the discourse around this, risks masking or under appreciating the challenges faced by those with the lowest incomes and wealth.

The difference in the total average value of the assets of the poorest 25% (poorest quartile) and richest 25% (richest quartile) of people aged 35 to 44 years old is about £11,000, while the difference for people aged 65 and over in those same quartiles is £35,000.[xiii] 

The wealthiest older people have also seen their wealth grow in previous years, while the poorest group became poorer. Analysis by UCL for the Centre For Ageing Better in 2021 examined the experiences of people in their 50s and 60s in 2018, and how this changed over time, by comparing them with people of a similar age in 2002. They showed that the poorest wealth group became 30% poorer between these years (accounting for inflation). For the top two wealth groups (the richest 40%) absolute wealth doubled in this time. The gap therefore between the top 20% of the wealth distribution and the bottom 20% widened in 2018, to twice what it was in 2002.[xiv]

Use of savings by older people

In 2022, 11% of pensioners - 1.3million people - had no savings at all, and 4 million people had less than £3000 in savings.

In a survey we conducted in 2024  and through subsequent interviews, older people told us about the fear they have of using up all their savings, as their income precludes them from replacing them. Unexpected housing costs is regularly cited as a concern. Those who shared that they can’t, or can only just, afford their essential costs, the most common use of savings was to supplement their income.

“I have used my savings so that I could live, and now, I have nothing left” Anonymous, 66-70

RECOMMENDATION: The needs of current older people in poverty are too often ignored and excluded from policy making.  The UK Government should prioritise developing a strategy to introduce policy interventions that tackle poverty for the current group of people in later life. 

RECOMMENDATION: A Commissioner for Older People and Ageing for England, should be established to champion and amplify the voices of older people, hold Government and public bodies to account and put forward policy solutions.

How does poverty impact on groups across the lifespan?

Poverty and hardship throughout working age continuing in pension age.

Poverty is experienced at all ages and stages, and the driving factors of pensioner poverty are similar to some of the driving factors for poverty in working age. For example, low wages in adult life or gaps in employment due to caring responsibilities, family breakdown or having a disability are some of the driving factors of poverty in working life, but also lead to lower savings, lower private pensions or gaps in National Insurance records which can lead to a lower State Pension. Our research ‘Poverty in Later Life’ showed that the majority (58%) of pensioners who entered poverty were in the second poorest income quintile a year earlier, and another quarter (25%) were in the middle quintile. This research also identified the persistence of poverty in later life as a significant issue. As income movement in older age is more ‘static’ than in younger groups, this means that those who enter retirement already in poverty are highly likely to stay there.[xv]

“[I have no private pension because there was] not enough spare income when raising children, then had to work part time from age 53 to 63 so I was around to support elderly parents. Still caring for one parent now we are retired.” Anonymous, 66–70

Additionally, there are increasing numbers of people in their 50s and 60s who are out of the labour market, due to ill health, and unlikely to return.[xvi] This results in significant financial impacts after State Pension age, as they are unable to build up sufficient or further private pension savings, contribute sufficiently to National Insurance. Some may face changes in their housing situation, such as having to move into private rental accommodation. Many use liquid savings to ‘bridge the gap’ until State Pension age.

People may also consider a lump-sum drawdown from their defined contribution pensions to bridge this gap before retirement. Some people might not understand how those withdrawals may affect their eligibility for means-tested benefits either immediately or in the future, and we are concerned that not enough people are accessing guidance for these decisions. Taking pensions savings as a lump-sum is more common in younger age groups of older people - reflecting newer pensions freedoms (since 2015) – compared with older age groups who are more likely to be receiving their pension as a regular income. Accessing a lump-sum, which is then treated as savings for the purpose of a benefit assessment, may impact eligibility for social security entitlements, and could result in means-tested support being withdrawn during working age (as lump-sums can be accessed usually at 55+), and/or affect eligibility for future pensioner age entitlements, such as Pension Credit or Housing Benefit.

The Institute for Fiscal Studies (IFS) analysis of FCA data shows that only 10% of people accessing pensions pots for the first time used free Pension Wise guidance[xvii]. Efforts have been made to increase awareness of the Pension Wise service, but the dial has moved little on take up of the service.[xviii] Independent Age, and the Work and Pensions Committee, have previously recommended a pilot scheme testing auto-enrolment for Pension Wise appointments, where people with a defined contribution pension can receive essential advice, including around how decisions may impact benefit eligibility[xix]. The proposal was rejected by the UK Government in 2022, we think this decision could be re-considered. 

RECOMMENDATION: A pilot scheme for testing auto-enrolment for Pension Wise appointments should be considered by the current UK Government.

Entering poverty for the first time at or after pension age

There are some people who experience poverty for the first time in later life. This can be for varied reasons, maybe as a result of an unexpected change such as a bereavement or relationship ending. Our research in 2022 showed that income loss (which can occur as a result of these life events) are significant factors in why older people enter into poverty.[xx] Whilst these events can be hard to capture quantitively, our ongoing research directly with older people supports this, as this example from a 2024 survey indicates.

“My income has reduced after my husband died and I lost his state pension half his civil service pension and the attendance allowance” Anonymous, 76-80

Many current pensioners had adequate wages which kept them afloat during their working lives, but they were either unable to save into a private pension, or unable to save a sufficient amount, meaning that there is an inadequate replacement of their working age income. This difficulty is compounded if people have housing costs such as rental costs or a mortgage which continues after State Pension age. 

Impact of the rising State Pension age

The rise of the State Pension age from 65 to 66 had a direct impact on increasing poverty for those impacted by the change. About a quarter of 65-year-olds ended up in poverty when the State Pension age rose, more than double the fraction who were in poverty the year before. This impact was felt the greatest by those who are single, private renters, and those who have low or no qualifications. For these groups, income poverty went up between 17-25 percentage points (compared to 13 percentage points overall).[xxi]

The next planned rise is to 67 by 2028. We are concerned about the potential that the UK Government will bring forward the planned rise to 68, currently planned for 2044-2046, to as early as 2037 (further to the outcome of the 2022/23 pension age review). The evidence is clear that this will result in an increase in poverty just before State Pension Age, coupled with the disproportionately negative impact on those already in financial hardship. The reasons for this relate to lower life expectancy and difficulties working up to State Pension age, amongst others. There are significant issues of inequality, with great differences in life expectancy across regions and UK countries. With improvements in life expectancy stagnating over the past decade, and high levels of people in later working life leaving the labour market due to health related conditions,[xxii] we would be extremely concerned about bringing forward the rise to 68 and how this would impact the poorest people in the UK.

RECOMMENDATION: We recommend that any changes to the State Pension age consider the number of people who may face financial hardship at, and after, retirement as a result of the change and that mitigations are put in place to decrease the negative impact.

Poverty and older age

Prevalence of poverty above State Pension age also increases with age - with 15% of people age 70-74 in poverty, compared with 21% of people aged 85 or over. This is most likely related to:

• The types of income received by the older group – the pre-2016 State Pension is less successful than the new State Pension in protecting people from poverty.
• Greater proportions of women compared to men in older age groups, who are more likely to have lower incomes than male peers and more likely to experience poverty in later life.

Are there international comparisons we could learn from?

The UK spends a smaller percentage of GDP on pensioner benefits than other advanced economies

In 2022, the OECD ranked the UK as having the 14th highest rate of pensioner poverty among 34 OECD countries (NB the OECD measurement of poverty is those living with less than 50% of median equivalised disposable income).[xxiii]

Due to the significant differences in structures of pensions systems – both in terms of state and private provision – there are problems comparing State Pension systems like-for-like internationally. However, it is worth noting that the UK spends a smaller percentage of GDP on the State Pension and pensioner benefits than most other advanced economies, and provides a lower level of pension relative to average earnings. The OECD average net replacement rate is 61.4%, and the UK’s is 54.4% - although older people in the UK have a better level of private pension provision than many other countries (on average).[xxiv]

With the UK’s flat-rate State Pension system, comparisons can be more easily made with countries operating similar systems. Both the Netherlands and Denmark operate a flat-rate model, but differ to the UK in that their system recognises the challenges faced by single people in retirement and provides different levels of payment depending on a person’s relationship/habitation status (i.e. a higher level of payment to a single person). While women face a higher risk of poverty than men in all OECD countries – Denmark is one of only four countries where this is not the case, and it has one of the lowest relative poverty rates for older people – below 5%.[xxv] There are multiple differences other than the State Pension system influencing this.

Private rental sector international comparisons

In 2024, Independent Age published our Paving the Way briefing examining the differing regulation of the PRS in other countries, and considering whether implementing these ideas in the UK would benefit older private renters facing financial hardship. We are happy to discuss any of the examples further with the committee.

To what extent does the current State Pension and other pension age benefits prevent pensioner poverty?

Coverage and level of the State Pension

1 in 8 people (13%) have no income other than the State Pension and state entitlements. This rises to 1 in 5 single pensioners. For many more, it is the majority of their income. For example for single people in the bottom fifth income decile, the State Pension and state entitlements (benefits) accounts for 86% of their income.[xxvi]

The new State Pension, if received in full, should keep people above the income poverty threshold (measured by 60% of median household incomes after housing costs), although individual circumstances, particularly housing and other high costs, can affect this. Many who are above the recognised income poverty threshold are unable to afford an adequate standard of living, and material deprivation amongst older people is growing  - which we discuss in a later section.

It’s important to know that the full new State Pension is only provided to a small number of current pensioners. Only about 30% of all older people (4.1m) receive the new State Pension, with the large majority receiving the pre-2016 State Pension (made up of the basic State Pension and additional State Pension)​. Of those receiving the new State Pension, only about half receive it in full (about 2 million older people). ​8.7 million, receive the pre-2016 State Pension, with 2.1m of this group receiving less than the full basic State Pension.

It is harder to analyse the State Pension receipt of those on the pre-2016 State Pension because of complexities in the system such as the historic systems of contracting out or ‘married woman’s stamp’.[xxvii]  But, we know that the rate of poverty rises with age (above State Pension age), with 15% of people age 70-74 in poverty, compared with 21% of people aged 85 or over, indicating that the pre-2015 State Pension is less effective at protecting people from poverty.

The State Pension and housing costs

The cost of rent is one of the biggest challenges older renters share with Independent Age.

If people have housing costs which are not covered by social security entitlements - either because of ineligibility, being an eligible non-claimant, or because their housing costs not covered in full through the benefits system - then someone on a full new State Pension may, after housing costs, be in income poverty. 35% of private renters over State Pension age are in poverty – and about 50% of this group are not in receipt of State Support (including Housing Benefit).[xxviii]

In additional, Local Housing Allowance, which is a vital element of Housing Benefit to support people of all ages on low income to pay their rent, often does not keep pace with rising rents. It is essential the UK Government takes action to address this because without doing this, older people in poverty are at increased risk of falling into rent arrears and could face eviction even after the Renters Rights Bill passes.

“Over the time, [the rent] has increased and it’s a lot of money… I do get Housing Benefit, which pays for quite a lot of it and it leaves me about between £200 to £300 out of my pension to pay the rest. I get Housing Benefit but I still have to pay. My pension is, I think, it’s about £174 a week, and so it [the rent] takes up quite a lot.” - Toni, 67

RECOMMENDATION: A proportion of older people entitled to Housing Benefit are not receiving it. A benefits uptake strategy, including ensuring everyone entitled to Housing Benefit receives it, could have the potential to lift a number of older people out of poverty.

RECOMMENDATION: For people who privately rent and receive Housing Benefit, uprating Local Housing Allowance to ensure it covers at least the rent of the cheapest 30% of the local private rental market is essential. The UK Government also needs to ensure that it is uprated annually to reflect changes in rents would make an immediate difference.

Pension credit

Take-up

Pension Credit was designed to ensure that those who live on a low income in later life are not in poverty. It’s an important safety net but isn’t catching everyone. Up to 760,000 older households - or up to 970,000 individuals - don’t receive the Pension Credit they’re eligible for. 85% of pensioner households in poverty don’t receive Pension Credit (HBAI for 22-23). They are missing out on a combined £1.5 billion a year, or an average of around £1,900 a year per household.[xxix]

Receiving Pension Credit and all passported entitlements makes an enormous difference to someone’s life. Pension Credit is worth an average of £3,900 a year. And passported entitlements can be worth an additional £8,000 a year.

Adequacy

In 2022-2023, around three quarters of Pension Credit recipients were no longer below the poverty line (HBAI data), showing how this benefit can lift many people out of poverty. However, 26% of households receiving Pension Credit were still considered to be in poverty (equivalent to more than 287,000 households). Reasons for this can vary, but can include high housing costs (such as mortgages, for which little help is available), and people not receiving other entitlements they are also eligible for.

RECOMMENDATION: Independent Age recommends that the UK Government initiates a cross-party process to establish an adequate level of income needed in later life to avoid poverty and puts plans in place to ensure everyone receives it. 

RECOMMENDATION: The UK Government should ensure higher take up of financial entitlements by producing a strategic action plan to increase the take-up of social security entitlements, including key benefits older people on a low income are eligible for including Pension Credit, Housing Benefit, Attendance Allowance and Council Tax Reduction.

What essentials should the State Pension and other pension age benefits provide?

90% of respondents aged 18+ to nationally representative polling we commissioned from YouGov in 2023 agreed with the statement ‘a key purpose of the State Pension is to ensure everyone has a minimum level of income in retirement’.[xxx]

Although the State Pension is considered ‘a building block’ for other savings in retirement, the reality is that for many people it makes up all, or a large majority, of their income. 1 in 8 older people have no income other than the State Pension and state entitlements – and this rises to 1 in 5 single older people. For single older people in the bottom fifth income decile, the State Pension and benefits accounts for 86% of their income.[xxxi]

“With the national pension…it goes up, but it doesn’t cover the increase in the rates or the rent. If the pension covered that, you’d be happy but they don’t correspond… it’s a constant watch, if you know what I mean.” - Daniel, 70

The full new State Pension falls short of accepted adequacy standards

There are existing measures of minimum acceptable living standards and adequacy such as the Joseph Rowntree Foundation’s widely used Minimum Income Standard (MIS) and the PLSA’s retirement living standards (RLS). Both are formulated based on public expectations and definitions of minimum acceptable living standards, and based on a real life ‘baskets of goods’ and social priorities. For a single person, the full new State Pension falls short of both – the full new State Pension reaches 94% of the MIS and is lower than the minimum RLS (£14,400 per year) by around £3000. The gap grows bigger if housing costs need to be met in full or in part by the State Pension only, for example if someone has mortgage or private rental costs to pay.

RECOMMENDATION: Having enough for a decent standard of living and a dignified life should be part of decision making when considering the level the State Pension and pensioner benefits. Adequacy should be used as the barometer to determine the minimum level for these entitlements, rather than the poverty line.

How do pensioners in poverty manage food, energy and housing costs with the income they have?

”Now the weather is going a bit colder, I try to live in the day in one [room]… I’ve managed with a little [radiator] in the kitchen where I generally spend my time and I go out a lot anyway. I’m trying to keep costs down that way.” - Pat, 80

”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.” - Christine, 60s

“I try to be very careful with money because as a pensioner you haven’t got much money to lash out anyway. So, you have to be careful when you go shopping. I shop alone for bargains and things like that.” Lloyd, 81

Material deprivation

Material deprivation is a measure of poverty indicating whether a household can access the items and activities necessary for an acceptable standard of living. Material deprivation is rising for older households from 6% (700,000 people) in 2019/2020 to 8% (1 million people) in 2022/2023, showing that older households are increasingly struggling to afford basic items and activities such as at least one filling meal a day, having a damp free home, and being able to pay regular bills.[xxxii]

Inflation is felt more by low income households

The Consumer Prices Index measure of inflation may not tell the full picture of how inflation is felt by the lowest income households in later life. This is relevant because CPI is part of the ‘triple lock’ system of uprating the State Pension.

The Households Costs Indices (HCIs) are statistics in development which can provide an insight into how different specific groups experience changes in costs. For example, they can look at retired households or low income households. We requested further analysis from the Office of National Statistics using HCIs, looking at how the combined factors of being in lower income and a pensioner (the bottom 50% of older households by income) impact on how changes in costs are experienced. This shows that between 2015 and December 2023, costs for low income retired households rose 37.1%, compared with a rise of 35.5% across all-households. While it wasn’t possible for this analysis to break down the income distribution further than the top and bottom 50% of pensioner households, it is likely that this disparity in experiences of inflation is felt more acutely by older people on the lowest incomes.

Lower income households are more vulnerable to inflationary pressures, as they spend more of their income on inflationary sensitive costs such as food, fuel and housing.

Housing

Older people with on-going housing costs are typically in private renting or social housing, although there is also a growing number of older people paying off a mortgage beyond their retirement.

For private renters

Amongst older private renters, our research found 45% were often or occasionally anxious about meeting their rent payments. Housing is foundational, and many prioritise rental payments above all other costs. Many older private renters we spoke to told us they were cutting costs, including heating and food costs and even stopping boiling a kettle for a hot drink.

For those on housing benefit, Local Housing Allowance rates are often not sufficient to meet housing costs, a problem exacerbated by freezes which have seen the rate at which the benefit is paid fall below the 30th percentile of local rents.

“The local housing allowance cap for Housing Benefit is less than my rent – although I have, over the years, had a Discretionary Housing Payment, which has made up the shortfall, or part of the shortfall, some of the time and only some of the years. So, it’s been a permanent case of worry about the rent every month and wondering how to cover it, except for when I was getting the Discretionary Housing Payment to cover up the shortfall.” - Alison, 66

Where eligible, entitlement to Housing Benefit for social housing tenants should cover the rent, but it is estimated that nearly 1 in 5 pensioners who are eligible for housing benefit are not claiming it.

RECOMMENDATION: Immediate action to address poverty for people who privately rent could be taken by the UK Government uprating Local Housing Allowance to ensure it covers at least the rent of the cheapest 30% of the local private rental market and to ensure that it is uprated annually to reflect changes in rents. 

RECOMMENDATION: As part of a broader benefit take up strategy for older people entitled to support set out by the UK Government, Housing Benefit should be promoted more widely to older renters on a low income.

Energy

Older people on a low income across Great Britain are struggling to manage high energy costs. Nationally representative polling we commissioned from YouGov in July 2024 found that 48% of people aged 65 and over living on an income of less than £15,000 a year in England and 40% in Wales were keeping up with their electricity bill, but it is either a ‘constant struggle’ or a struggle ‘from time to time’.

“…with the energy crisis as well, I don’t drink tea anymore, because putting the kettle on, six pence. Got to try and pull my belt in, in many ways.” - Peter, 70

“I am fed up with sitting in a freezing cold house, around eight degrees. We are told this is bad for our health, but there is no option. I keep catching colds.” - Judith, 77

Older people living on low incomes have shared with us how they feel they have no other option but to try to manage by, for example, wearing extra clothes, going to bed early, spending time in public places to keep warm and keeping the lights off in their homes, all to save on electricity costs. This is especially difficult for those in ill health or with disabilities who may have additional energy needs to keep their homes warm, and so have higher costs. Our polling found that, of those on a low income who have a disability or health condition, 38% said it means they use more gas and 40% said more electricity.

Further support for household struggling to manage their energy costs is required. We believe that an energy bills social tariff should be introduced by the UK Government to ensure that people living on a low income of all ages, and those with disabilities or health conditions, receive long-term protection against high energy costs. Whilst regulation of energy markets is a reserved matter, the Scottish Government have been taking forward action with the energy industry to instigate and investigate how to implement a social tariff to support those on low incomes[xxxiii].

Nationally representative polling we commissioned through YouGov in November 2022 showed that there is majority (more than 85%) support in Great Britain among older people on a low income for the introduction of an energy bills social tariff. This was favoured over other measures such as a one-off payment from the Government to support people in later life in financial hardship with their energy costs.

RECOMMENDATION: An energy bills social tariff should be introduced by the UK Government to ensure that people living on a low income, and those with disabilities or health conditions, receive long-term protection against high energy costs.

RECOMMENDATION: We welcome recent proposals from Ofgem that energy suppliers will be mandated to offer tariffs with low or no standing charges. Implementation of these changes should ensure that full or partial reallocation of these costs protect low-income customers from the impact of unfair, high fixed costs and give them greater control over their energy bills.

RECOMMENDATION: We also welcome Ofgem’s proposals for better support for households struggling with energy debt. Energy debts have a severe negative impact on older people in financial hardship, and implementation should ensure greater support for households helps them manage the burden of debt accrued over the previous few years of high energy prices.

Fuel poverty definitions                           

In England, the measurement of fuel poverty no longer includes a 10% income threshold or an adequate heating regime component. The metric was most recently changed in the 2021 Fuel Poverty Strategy, to the Low-Income Low Energy Efficiency (LILEE) indicator[xxxiv]. According to this, a household is in fuel poverty if:

• their home has a Fuel Poverty Energy Efficiency Rating (FPEER) of band D or below

and

• if, after subtracting their modelled energy costs and housing costs, their residual income is below the poverty line.

In Scotland, under the definition used, 36% of older households experience fuel poverty, and 24% are in extreme fuel poverty[xxxv]. In England, under the English definition just 13% of pensioner households are considered to be in fuel poverty[xxxvi]. This is problematic for policy making and understanding the true extent of fuel poverty across England amongst older households.

Two issues hide the overall numbers in fuel poverty in England, and the relative rate of fuel poverty among pensioners in England. 

• Under the English definition, anyone in a property with EPC better than D will not be counted in fuel poverty figures. However, we know that 46% of households in fuel poverty in Scotland live in properties with EPC A-C ratings. The definition in England would not include these people, and therefore potentially make it look like the number of fuel poor households has reduced by half.

• Historically fuel poverty definitions were based on energy usage required to maintain an adequate heating regime, plus lighting and cooking. If that amounted to more than 10% of income (after housing costs) then a person would be considered to be in fuel poverty. Assessment of usage is now gone under the English definition and replaced with link to 60% of HBAI (i.e being below the poverty line).

The removal of the link to usage particularly impacts how older people appear in the statistics. Historically the amount required to maintain adequate heating regime varied according to household type. Older people were allocated more heat for more hours and more days due to living patterns (more time at home) and health reasons, as the very old and the very young are less able to regulate body temps and therefore more susceptible to cardiac and respiratory disease. By moving away from energy usage and heating regimes, fuel poverty amongst older people will appear to be reduced relative to rest of population. This must be considered in the wider context of making decisions that impact on (and reduce) the support available to households in managing their energy costs (i.e restricting the Winter Fuel Payment).

Energy support across the nations

Pension Age Winter Heating Payment (PAWHP) was due to replace the Winter Fuel Payment in Scotland and be administered by Social Security Scotland in 2024[xxxvii]. Recent changes to the eligibility criteria of the Winter Fuel Payment from the UK Government, resulted in the payment across the UK being administered by the UK Government this year on the same basis. However, recently the Scottish Government announced their intention to bring forward new regulations on PAWHP to reinstate a universal element to the payment, with tiered payment rates (£100 for all older people, £200 for those on Pension Credit and aged under 80, and £300 for those on Pension Credit and aged 80 and over) from Winter 2025[xxxviii].

Further differences in the energy support available to older people in Scotland include Winter Heating Payment which is paid at a flat rate to everyone eligible (rather than being temperature dependent). The equivalent Cold Weather Payment in England and Wales is temperature dependent, set at a rate of £25 for each 7 day period of sub-zero cold weather. The Scottish system is also more generous, and annually uprated so it is currently worth £58.75 in 2024[xxxix].

Water

Older people on a low income across England and Wales are struggling to pay their water bills. Our report Looking for a lifeline: Modelling a single social tariff for water bills[xl] shared some nationally representative polling we commissioned from YouGov which showed:

• 38% of older people living on a low income in England and 29% in Wales had found it either a ‘constant struggle’ or a struggle from ‘time to time’ to keep up with paying their water bill between January and July 2024.
• 35% of older people living on a low income in England and 31% in Wales are worried about being able to pay their water bill over the next six months.

Older people living on a low income have told us that they are cutting back on their water usage to manage the cost of their bill. 40% of older people on a low income in England and 33% in Wales have had to cut back on their water usage either ‘a great deal’ or ‘a fair amount’. For some of the older people we spoke to, these cuts went far further than reasonable water efficiency savings, and instead had become a harmful level of self-rationing. For example, older people have told us they are reducing how often they flush the toilet, how often they shower, and how often they do laundry.

We also worked with the University of York to model levels of water poverty among older people living on a low income. This analysis showed that in 2022/23, nearly 750,000 pensioner households were living in water poverty - where water poverty was defined using the 3% threshold. This equates to 11% of all pensioner households. The modelling showed that without additional interventions, water poverty among older people will rise in the coming years. Our analysis showed that nearly 1 million older people are forecast to be in water poverty by 2029/30, where water poverty is measured at the 3% threshold. This analysis was based on the expected bill prices for 2029/30 published by Ofwat in July 2024 which suggested an average increase of 21%. However, in December 2024, Ofwat announced that water bill prices would rise further by an average of 36% by 2029/30 - meaning that levels of water poverty may be even higher than our modelling suggests.

Support exists in the form of social tariffs for water bills provided by each individual water company, but there is a postcode lottery with each company providing a different scheme.

A single social tariff for water is supported by the majority of older people in England and Wales. 73% of older people in England, and 72% in Wales, across all income levels, support the introduction of a single, standardised social tariff for water bills in England and Wales.

RECOMMENDATION: the UK Government should work with Ofwat, the Consumer Council for Water, water companies, charities and other stakeholders to introduce a single social tariff for water bills in England and Wales.

What impact does the cost of living have on the health of pensioners in poverty? What impact does this have on the NHS and social care?

The interlinking relationship between health and poverty throughout the life course means that many of those who are the poorest when they reach pension age are often in the worst health among their cohort and have the lowest life expectancies[xli].

“You've got to pay your rent, so my husband will sit at home with a jacket on and fingerless gloves.” - Older renter

"I can't afford heating, and survived in a temperature of average 10 degrees the last two winters.“ – Judith, 78

For the poorest and those in worst health, increasing costs can lead to people making cut backs in a way which can affect their health. As outlined earlier, Independent Age has heard that older people are limiting their energy usage, particularly by limiting the amount of heating they use. Nationally representative polling we commissioned in July 2024 found that 55% of people aged 65 and over with an income of less than £15,000 in England and 48% in Wales were having to cut back their spending on their heating either ‘a great deal’ or ‘a fair amount’. The NHS recommends heating homes to at least 18 degrees due to the impact of the cold on conditions such as chest infections and the likelihood of cardiac events. 

We ran a survey in Winter 2023 where numerous older people told us about the impact that living in a cold home was having on their health; particularly if they were living with a disability or existing health condition.

“I have COPD [Chronic Obstructive Pulmonary Disease] and became quite ill last winter due to the cold. I can’t do that again.” - (Margaret, 76)

“I am not able to keep my hands warm much of the time. This has resulted – last winter and this last cold spell – in very red & sore fingers, which bleed if I catch them. Hence, my fingers are covered – almost permanently – with breathable plasters.” - (Anonymous)

“I have a rare heart condition and have been advised to keep warm in winter but only put the heating on (for a very short time, 1 hour daily) when the temperature falls under 0 degrees.” - (Anonymous)

For other older people in financial hardship, the challenging conditions they are facing as they struggle to meet their costs are impacting their mental health, with the older people we surveyed telling us they felt stressed, depressed, and in some cases even expressing their wish to no longer be alive.

“Life is miserable in winter.” (Anonymous) “It is affecting my mental state.” - (Anonymous)

“I am finding it extremely difficult to stay warm, at my age I don’t go out very much, so I am sat in a very cold room. I am 73 and recently widowed, my state pension is basic so I cannot afford heating and regular hot meals. I pray that I follow my husband sooner rather than later.” - Barbara, 74 

We heard from others who are limiting their water usage, including in some cases limiting showering and flushing the toilet. Our ‘Looking for a Lifeline’[xlii] report found that 40% of older people on a low income in England and 33% in Wales have had to cut back on their water usage either ‘a great deal’ or ‘a fair amount’. The NHS suggest that poor hygiene can cause discomfort, skin complaints and infections, and can lower self-esteem.

“You know, I think, ‘Can I afford to keep going in the shower daily?’ No. I can’t. I can’t do that anymore.” – Anonymous

People we spoke to were also changing the types of food they buy or cutting back on grocery bills. In the first 6 months of 2024, nationally representative polling showed over half of older people on low incomes reported struggled from time to time or constantly with paying for food and drink.[xliii]

“The food I had to eat [due to health condition] was more expensive than normal foods because it was low fat and special name brand and everything. The foods that I need, I’ve got to stick to, [even though] it’s so hard to get them…we’re trying to get the cheapest in the supermarkets and go for their own brands… We sat down and calculated how much it had gone up” – Eddie, late 60s

Older people on low incomes also shared with us they are limiting their social interactions. In the first 6 months of 2024, 49% of people on lower incomes reported that they are cutting back on social activities like meeting friends[xliv]. People who are lonely are 6 times more likely to experience poor mental health[xlv] and there is an association between social isolation and increased risk of early mortality[xlvi].

“I love to have my grandchildren for supper and before I’d say they can come a couple of nights a week. Now I have to think, right maybe once a fortnight but I’d feed them and just have coffee myself.” - Linda, late 60s

In addition, living on low income has a long standing association and re-enforcing relationship with poor mental health. 

“I mean, I’m on anti-depressants. Like I say, some days are really bad, I’m really

down and other days I can be okay. It depends what’s going on financially.” - Yvonne, 76

As outlined above, living in financial hardship has a huge impact on physical and mental health. And with the loss of the Winter Fuel Payment, many more older people are now making decisions which will negatively affect their health. In polling that Independent Age commissioned[xlvii]:

• 44% of adults over 65 think losing the Winter Fuel Payment will have a negative impact on their physical health
• 40% of adults over 65 think losing the Winter Fuel Payment will have a negative impact on their mental health
• 21% expect to cut back on essential costs (eg food and water), but had not expected to do this before Winter Fuel Payment announcement. 8% had already expected to have to do this
• 77% expect to turn heating on less than they would like

Research we commissioned in 2020 from Loughborough University found that if Pension Credit had been taken up in full during a year when £2.1 billion was not received by those eligible, it could have saved the NHS and social care systems £4 billion[xlviii]. Academics at Loughborough university estimated that the additional health and care services needed by pensioners on low incomes who were entitled to, but not receiving, Pension Credit was between £3.02 billion and £4.81 billion per year. The social care costs were between £66million and £189 million.

What measures to offset the impact of the cost of living on pensioners are most effective? How do these vary in the devolved nations? 

Cost of living issues are not new for many pensioners. As discussed above, recent increases in energy prices and broader price inflation on essential items have only worsened the already existing situation. Whilst there are some interventions which aim to address some of the worst hardship, as we have outlined in this response there needs to be measures to address fundamental adequacy of the social security system for older people.

Some policy interventions exist, or have been tried, to offset the impact of the cost of living. These include:

• Cost of living payments - Cost of Living support made a difference to the number of people in poverty. When it is included as ‘income’ within the data used for the 2022/2023 HBAI statistics, pensioner poverty is shown at 16% or 1.9 million. If this temporary support is omitted from the data, pensioner poverty is estimated at 18% or 2.2 million.[xlix]
• Social tariffs, for example in the water system and broadband sector have been shown to make a difference to older people on a low income. More detail is included in the section above.
• Increasing take-up of social security entitlements, which research we commissioned from City, University of London showed to be the biggest factor in lifting older people out of poverty.[l]

However, we would reiterate that the level of safety net currently provided through the benefits system is missing out large numbers of people who we know are in financial hardship. 

Variance across the nations - Scotland

The Scotland Act (2016) devolved some elements of social security delivery and administration to the Scottish Government[li]. This includes control over disability related social security payments, winter support payments, carers support and funeral support payments.

It is important to consider both the fundamental differences in the approach to social security across the nations, as well as specific differences in payments. Differences which could inform changes for the UK as a whole include:

• Language and principles within the social security system - Social security payments in the Scottish social security system are formally set out in legislation as types of ‘assistance’ compared to ‘allowances’ or ‘benefits’ as in the UK legislative framework[lii]. Legislation at a UK level is highly functional (setting out eligibility and procedural mechanisms) but does not set out the values that the public authority is expected to comply with through the decision-making process. In contrast, the Social Security (Scotland) Act 2018 establishes an explicit values-rooted basis for the functioning of the social security system in Scotland, in a way that is without parallel in any other piece of UK legislation.
• Take up duty - A welcome aspect of the Social Security (Scotland) Act 2018 was the inclusion of a statutory duty on Scottish Ministers to promote take-up of assistance under S.3 of the Act, and the requirement to develop a strategy to increase take-up of devolved social security payments (S.8).
• Take-up strategy - The Scottish Government are currently on their second iteration of a Benefits Take-Up Strategy[liii]. The Scottish Government has also committed to publishing a ‘seldom-heard’ groups take-up strategy, following research they commissioned to provide evidence on the groups who are at particular risk of being marginalised from the Scottish social security system[liv]. This research found that socially-isolated and housebound older people are at particular risk of missing out on their entitlements[lv].

RECOMMENDATION: The UK Government should learn from the work being done to improve social security entitlement uptake in Scotland, replicating successful elements. And the UK and Scottish Governments must work together to ensure that every older person is receiving all of the social security entitlements (whether reserved or devolved) that they are entitled to. This could include embedding language of dignity and respect to tackle stigma.

In Scotland, Pension Age Disability Payment (PADP) is replacing Attendance Allowance as the form of social security assistance for older people living with ill-health or a disability.

Whilst many elements of PADP remain the same as Attendance Allowance - including most of the eligibility criteria and the lack of a mobility component and payment rate - there are some important differences in the eligibility criteria and planned administration of the payment.

One such difference is around the criteria for terminal illness, which enables fast tracking to the higher rate of Attendance Allowance/PADP. The Scottish Government have changed the rules around terminal illness to remove the expectation of death within 12 months, instead replacing this with the decision of a medical professional in confirming a diagnosis is terminal (without any time requirement)[lvi].

How effective are discretionary payments such as the Household Support Fund?

There is a lack of data in this area for England so it is hard to analyse efficacy of the Household Support Fund. In particular, we don’t know how much is spent on older people in comparison to other age groups. We know anecdotally that there are some examples of Household Support Fund being used effectively to support older people in poverty. For example, we are aware that in some London Boroughs[lvii] it is being used to fund benefit advisers. Our research with local councils[lviii] found that having a team internally who provide income maximisation advice can be incredibly valuable and an effective way of getting more money into the pockets of older people living on a low income. We are also aware of some councils (for example Kent County Council) who are using the Household Support Fund to replace the Winter Fuel Payment for some who are just above Pension Credit threshold.

Councils are reporting that due to the short term extensions of the Household Support Fund planning is difficult.

If a longer term fund, similar to the Household Support Fund is being considered we would encourage those designing it to ensure that older people in financial hardship are fully considered, particularly in cases where individuals in poverty are not receiving Pension Credit they are entitled to. 

Learnings from devolved nations

Whilst over recent years the Household Support Fund has been in place in England. The Scottish Government has for some time consistently funded the permanent Scottish Welfare Fund as a means of offering emergency support to people – either in financial crisis, or requiring support to live in the community. The Scottish Government have clear guidance on the fund for Local Authorities who administer it and suggest consistency in terms of two types of payments available; crisis grants for those in financial crisis and community care grants for those requiring support to live in the community.

The Scottish Government also publish data, collected from Local Authorities who administer the fund, including with age breakdowns; so it is possible to understand who the recipients are. In 2023, the Scottish Government committed to improving awareness of the Scottish Welfare Fund amongst older people.[lix]

RECOMMENDATION: More data should be collected in order to understand the effectiveness of the Household Support Fund where it comes to reaching older people in financial hardship.

What is needed to improve access and take up of Pension Credit and other social security support for pensioners in poverty?

Too many older people in financial hardship miss out on the money they are entitled to. This is a long standing problem, particularly with Pension Credit which has had a pretty stagnant take up rate of  between 61% and 66% for the past 10 years.

We have conducted research with local authorities and are aware of existing local schemes delivered by local authorities and others which are aimed to increase awareness of Pension Credit and therefore uptake among those who are eligible[lx]. However many councils have funding cuts and restrictions which means they often can’t prioritise this work, even if they know it is needed.

We know through the grants programme we provide that many older people do not feel comfortable approaching the Government or even national charities. Particularly among those from racially minoritised groups there can be low levels of trust.[lxi] One way to combat this is to fund – as Independent Age is – local community based organisations. Many of them have established and trusting relationships with older people on low income in their communities and can provide an expert adviser to support the older person through the benefits system.

Independent Age also has strong evidence that awareness is not the only barrier to uptake of Pension Credit among older people. Many older people speak to our advisers on how the complexity of the social security system puts many off applying, or means they give up during the process. Independent Age will be publishing more of this evidence in early 2025, including:

• Recommending ways to simplify the application processes
• Recommendations on how data can be harnessed to increase uptake
• Ways communication can be made more effective
• Recommendations on sufficient resource for the Department for Work and Pensions, and supporting the advice sector.

The underlying complexity of the system leaves behind many older people who are entitled to support., particularly as they may not understand how different entitlements are linked together. For example, many older people do not know they are entitled to Attendance Allowance or who have an underlying entitlement to Carers Allowance. If individuals are in receipt of these benefits, the threshold for Pension Credit is higher, meaning many may become eligible for Pension Credit when they weren’t previously. Similarly, many older people on low incomes are entitled to Council Tax Reduction or Housing benefit, but are unaware of this. Any improvements in awareness must look at the entirety of the benefits available to older people on low incomes and encourage take-up across the board.

We also believe the systems and processes could be made simpler to ensure that once someone has successfully started receiving Pension Credit, they then more easily receive the other associated entitlements. At the moment the individual still has to apply for most financial entitlements and discounts separately – including, Council Tax reduction, help with glasses and dental treatment, the TV license, social tariffs for water – rather than once they qualify for Pension Credit them being proactively/automatically given the additional money or discounts they are entitled to.

We welcome the DWP’s action to try and proactively reach out to people who might be eligible for Pension Credit. For example their trial to contact people in receipt of Housing Benefit who might be eligible. We would like to see more of these innovations including exploring  whether any entitlements could be partially automated, and considering the feasibility of pre-filled forms. Automated processes can make the process feel easier for applicants, helping to reduce shame and stigma,  which is a significant barrier to people receiving the money they’re entitled to.

RECOMMENDATION: as the Work and Pensions Committee recommended in the last parliament during their Cost of Living inquiry[lxii], we want the UK Government to design and implement a strategic action plan to increase the take-up of pension credit, and of wider social security entitlements for older people in financial hardship. The UK Government and Department for Work and Pensions could learn from the Scottish take-up strategy.

Is there sufficient data to enable efficient targeting of support? Are there delivery mechanisms that allow effective targeting?

The current data and delivery mechanisms are likely not sufficient to fully automate Pension Credit, meaning that paying it to all those eligible without them having to apply would not be possible. However, analysis of what barriers there are to this, and ways of overcoming it, would likely provide useful insight which could be used to increase uptake. 

Increasing take-up:

There are many examples of local authorities using data to identify who is likely eligible for Pension Credit – we featured some of these in our 2023 Pension Credit toolkit report.

For example, one Local Authority used data from the Department for Work and Pensions (DWP) about local Pension Credit recipients, enabling them to exclude those people from their targeting efforts. Some Local Authorities used proprietary benefits analytics software. When combined with data provided by the Local Authority, this software can estimate eligibility for Pension Credit by household, allowing for close targeting. While use of this software usually carries a fee, it often achieved good results. One Local Authority sent draft letters to local GP practices, which then used their patient data to send the letters to residents over a certain age. This helped the Local Authority to target residents by age using data they didn’t own. Another good example is the partnership between Policy in Practice and Greater London Authority.

However, one Local Authority told us that data sharing, both between central government and Local Authorities, and between different teams within LAs, was the primary challenge to increasing uptake and targeting support. We have heard testimony from local authorities and companies who provide social tariffs that a better understanding and communication of data sharing and data governance could be really helpful to overcome some of these barriers.

RECOMMENDATION: As part of a wider national benefit uptake strategy, the Department for Work and Pensions and Local Authorities could improve take-up of Pension Credit by learning from and implementing existing good practice.

Some Local Authorities we interviewed initially focused on promoting benefits other than Pension Credit. One example is Attendance Allowance, a benefit that provides financial support for people with care and supervision needs and is also underclaimed. The fact that it is not means-tested – in contrast to Pension Credit – removes the barrier of people having to share detailed personal financial information. Some Local Authorities used DWP data to identify which residents over a certain age were not claiming Attendance Allowance, and then used this data to target those households with information. They established contact and built a relationship before moving on to specifically check people’s Pension Credit eligibility.

Additionally, more could be done to use data to ensure that those receiving one entitlement receive everything they are entitled to. For example, a Pension Credit application should trigger a Housing Benefit application at the same time, meaning DWP would share some of data with the local council, but this doesn’t always happen.

RECOMMENDATION: As part of a wider national uptake strategy, the Department for Work and Pensions and Local Authorities should consider uptake of all benefits that this older people in poverty could be eligible for and learn from good practice in this area. 

Targeting support, including those not eligible for entitlements:

We know that many people with incomes just above the Pension Credit threshold are struggling financially, but this group are difficult to obtain data on and target.  This is particularly the case because Pension Credit creates an automatic entitlement to a range of benefits (now including Winter Fuel Payment) and reduced costs (including Council Tax relief and water social tariffs in some cases). We have calculated that Pension Credit can entitle someone to up to £8,000 in other benefits and reduced costs[lxiii]. Therefore, those just above the Pension Credit threshold, including those receiving the full State Pension and little or nothing else, can be among the poorest pensioners as they are not entitled to the range of support that would lift them out of poverty. 

Identifying people in this group poses additional challenges as they will not be on the Department for Work and Pensions database.  Some evidence from Scotland has suggested that universal payments are the most effective mechanisms to reach ‘seldom heard’ groups as this guarantees an income ‘floor’ which no-one can fall below[lxiv]. Independent Age plans to do additional work on this in the future, but would advocate for a review into what would encompass an adequate income in later life and mechanisms to be introduced to ensure that income to this level is received.

RECOMMENDATION: UK Government needs to take action to ensure that the social security system post-State Pension age is adequate to prevent poverty and financial hardship in later life. The first step in this would be agreeing what an adequate income in later life is.

Appendix 1

Groups more likely to be in poverty in older age

Single

Compared to couples, single people will likely be in a situation where they are living on a lower income while still facing some relatively high costs, such as rent or energy. Many people become eligible for social security payments when they become single – for example, they may qualify for Pension Credit if their income drops because they are no longer part of a couple due to bereavement or divorce – but many do not know about their entitlements, or believe they are ineligible or face stigma around applying.

Female

Women are less likely than men to have a full State Pension and more likely to have a low private pension or no private pension at all. This is driven largely by inequalities this group faced throughout their lives, for example the gap between men and women’s pay during working life. For some, caring responsibilities – either for young children or other relatives – stopped them being able to take on paid work for periods of time or meant they had to reduce their hours. Others meanwhile have been affected by the rapid change to the State Pension age for women.

“Did not realise in time that the State Pension age was rising so not enough time to save into a private pension. What I did manage to save was only a very small amount and soon disappeared. Did not foresee that my husband would leave/divorce me after 25 years of marriage so I would be left to struggle on my own.” - Anonymous, 66–70

The gender pension gap is present in both the State Pension and private pension systems, although the New State Pension has done a lot to reduce this – women born in the early 1940s (on the pre 2016 SP) receive around 25% less in State Pension income than men, and this gap has reduced to below 5% for those born in the early 1950s (who are mostly on the New State Pension). However, this means that older women are particularly likely to be in poverty.

The gender gap in private/occupational pensions is wider, both for retired women and women of working age. For example, women born in the 1950s receive about 45% less in private pensions income than their male peers.[lxv] And the older a woman is, the less likely she is to have additional pension income on top of the State Pension. Our analysis of HBAI data shows that almost 1 in 3 women age 80-84 have no private or occupational pension income, compared with 1 in 6 men.

“Born in 1950s, started work in 1970s: State Pension WAS the available pension. Subsequently never earned enough to be able to afford to join a private/workplace pension. Chose to remain single so struggled on a woman’s salary only to pay bills, run car and rent/mortgage so nothing to spare for pension or savings.” - Anonymous, 66–70

In research we commissioned from the Collaborative Centre for Housing Evidence, in 2040 14% of women could live in the private rented sector and over half (54%) of them are projected to be living in poverty.[lxvi]

Private renters

As many older homeowners have paid off their mortgages, they typically have much lower housing costs compared with the cost of renting. Older renters are therefore often facing a substantial cost not faced by others. Through our research, we have found that many of the older people who are renting privately are struggling to keep up with paying their rents.

“My rent has just gone up to £750 a month - my income is £1,299 before all my bills are paid. My outgoings are roughly £1,100 before food. My state pension income is £10,400 per year, it’s barely enough to manage. I’m in a constant state of disbelief as to why the government can possibly think that this is a reasonable amount to live on. I’m just about surviving.” - Sue, 68

Our report ‘Time to Rock the Boat’ found that 39% of older private renters were worried about not being able to pay their rent[lxvii]. This is a particular issue for those who receive housing benefit: the on-going freeze to Local Housing Allowance rates while rents continue to rise at a record pace means that the benefit received is often not sufficient to cover housing costs.

Our work in ‘Keys to the Future’ highlighted the increasing trend of private renting in later life that may, without intervention, result in much higher levels of poverty in later life. But the problem is already here, with 35% of older renters in poverty. In a recent survey we conducted, we asked people if they had income other than the State Pension and entitlements – 31% of private renters who answered our survey told us they didn’t, compared with 17% of homeowners. Private renters were also more likely to tell us that they were struggling financially – with 46% of private renters telling us they either often struggle to make ends meet or cannot afford their essential costs, compared with 16% of homeowners who told us that this was their situation.[lxviii]

Racially minoritised ethnic groups

There are well-known structural reasons that contribute to people from racially minoritised groups being in poverty, including long-term discrimination in relation to work and housing, which can occur earlier in people’s lives. Many people from minoritised ethnic backgrounds faced disadvantage regarding employment, earnings and private pension savings.[lxix] Older people from racially minoritised groups are less likely to be in receipt of occupational or personal pensions than their White peers. For example, only 32% of Asian/Asian British pensioners receive an occupational pension, compared to 65% of White pensioners. And, Asian pensioners average incomes from occupational pensions are far lower - £96 per week compared to £214 per week for white pensioners.[lxx] People from racially minoritised groups could also have come to this country later in life and have less national insurance contributions and therefore end up with a lower State Pension.

Carers

Often people may have had caring responsibilities earlier in life – for children or a relative – which means they cut their working hours down, or had to stop work completely for periods of their working life. This can limit people’s ability to save and contribute to a private/work placed pension. Caring itself also adds extra costs that someone wouldn’t otherwise experience, and we know that too many people miss out on the financial support they should receive. For example, many older carers are not aware that they could have an ‘underlying entitlement’ to Carer’s Allowance, which means that even though they aren’t eligible to receive it, they could be entitled to the means-tested benefits associated with it. This additional financial support could boost people’s wellbeing, but many older carers don’t know it’s an option, or get confused by the incredibly complicated process.

Long term health conditions and disabilities

As well as the physical and mental toll experienced, living with a disability or long-term condition comes with extra costs for individuals – for example, the need to purchase specialist equipment or spend more on energy to keep warm or power medical equipment. This means, on average, disabled people are unable to achieve the same standard of living as non-disabled people. If the long-term condition or disability affected the person during their working life, this could affect their ability to save for a private pension in later life or amass savings.

If you have any questions about this submission please contact: xxx