Poverty on the rise

After years of decline, pensioner poverty is back on the rise, with statistics from Joseph Rowntree Foundation showing one in six pensioners are living below the breadline.

While they are still some way off the crisis levels seen in the 90's it is a situation that needs to be put into reverse as soon as possible. The reasons behind the rise are complex and based on societal shifts – the world we live in now is very different.

The traditional image where someone retires having paid off their mortgage and with a final salary pension is no longer a reality.

Increasingly people are still paying off their mortgages well into retirement, or they need to find money to cover their rent. 

Research from Royal London shows the huge impact rental costs can have on the amount of money you need to save for retirement. According to the research, the average person needs a pension pot of £260,000 to achieve a decent standard of living. However, for those needing to find money to pay rent this figure shoots up to £445,000. Given that average pension pots hover at around the £30,000 mark you can see that many people are ill equipped to meet the challenges of financing retirement.


While this paints a grim picture it is important to say that things are being done. The introduction of the single tier state pension will boost the retirement incomes of many pensioners with the triple lock in force to ensure it rises in line with whichever is the highest of earnings, inflation or 2.5%.

In addition, the advent of auto-enrolment in 2012 means that more than 10m workers have been enrolled into a workplace pension scheme. However, while this is a huge positive more needs to be done to raise contribution rates beyond their current 8% so that people are saving an amount that will give them a decent income in retirement.

Short term

While all these things will have an impact over the long term, what can be done to help pensioners who are struggling now? It is hugely positive that we are seeing an increase in the number of older people in work. As well as boosting income, staying in the workplace has huge benefits for both the pensioner and the employer who is able to benefit from their expertise. It is a shift that needs to be encouraged so that someone over pension age who wants to work is able to.

We also need much more awareness of benefits such as Pension Credit which top up the income of the poorest pensioners

While this can make a huge impact on someone’s income many people who are eligible have yet to claim it.

Unfortunately there have been recent moves by government to restrict access to Pension Credit. From May 15 couples where one partner is above state pension age while the other is below it will no longer be able to claim Pension Credit. Instead they will have to claim Universal Credit which pays out much less until both parties are over state pension age. It is important that as many pensioners as possible know what they are entitled to and are able to make a claim.

After so much progress, it is vital that we take action now to make sure pensioner poverty rates do not continue to creep up. While auto-enrolment will help people build up their pensions in the future it is also vital that the workplace is welcoming to those pensioners remaining in work and that there is an increased awareness of the benefits available.

Helen Morrissey is pension specialist at Royal London.


Have you been affected by any of these issues?


If you have been affected by any of the issues described in this blog, or simply need someone to reach out to, you can call Independent Age’s freephone Helpline for information and advice on 0800 319 6789.


The views and opinions expressed in this article are those of the author and do not necessarily reflect the policy or position of Independent Age