Pension industry urges saving as new report paints bleak picture of poverty in late retirement

16th May 2016

One fifth of the over 75s and a quarter of single women aged 75 are living in poverty according to a report and analysis from charity Independent Age.

The incomes of older pensioners are, on average, £59 a week or almost £6,000 a year less than other pensioners with as many as a million living in poverty.

The analysis also showed a big dependency on the state pension and benefits and a much greater risk of poverty with age.

The charity has called for action in a number of areas –

It wants the government to promote the take up of Pension Credit and other benefits to the groups of older people most at risk of living in poverty – in particular single older people, older women and older renters.

The charity says the government should introduce a ‘triple lock’ on Pension Credit to guarantee that recipients of the ‘old’ State Pension do not suffer a relative decline in their state income.

The government should ensure that lower income pensioners continue to receive vital universal benefits like the Winter Fuel Payment and the free bus pass.

The government should guarantee that proposed reforms to Attendance Allowance will not introduce a means test, and will not result in reduced incomes for older people.

The study also quotes from one person -Beatrice, 82, lives alone in council housing and struggles with her low income.

She says: “I have to live within my means. Last Christmas, people asked what I wanted and I just said, give me money instead of gifts. I just have to cut my cloth. When you get older, the more you need some things, especially for health. As my knees get worse, I can’t go out without braces.”

She is ‘worried sick’ about the freezer breaking because it allows her to save money through bulk buying: “If it does pack up, I don’t know what I’ll do; all that is playing on my mind.”

The pension industry has seized on the report to urge those who have not retired to make sure they save enough now.

Steven Cameron, Pensions Director at Aegon UK, says: “For the million people aged over 75 that are living in poverty many are merely guilty of underestimating the financial demands of later life. Unexpected costs for care or supporting children and grandchildren means that far too many struggle to meet the ever increasing cost of living. With thousands missing out on money they are entitled to, it is vital that communication of the support available is clear, and pensioners that are eligible do claim Pension Credit.

“For those saving for their retirement today it is still possible to avert this situation, the best advice to build up a pension pot that will support through the entirety of retirement, is to start saving early. Engage with your pension while young, and your money will work harder for you, for longer. At present, just 12% of the population are on track for the retirement they aspire to have and the reality is that people expect far more in retirement than their savings will achieve, with those nearing retirement facing as much as a £13,000 shortfall on their desired annual retirement income.

“But while early contributions are the best remedy for most, it’s no panacea for those falling behind in the midst of their savings journey. Through a lifetime there are a number of financial pressure points, may it be purchasing a home or sending a child to school/university, but for the UK to achieve the retirement many aspire to, it’s vital that pension contributions continue to be prioritised.”

 

Leave a Reply

Your email address will not be published. Required fields are marked *