Living on the edge

“Pensioners have stopped being poor,” declared the Institute of Fiscal Studies last week, suggesting that, in light of rising retiree incomes, state pensions benefits should be cut.

 

 

 

 

But just how true is it that pensioner poverty has, as the IFS suggests, been magically eradicated?

 

 

 

 

IFS director Paul Johnson qualified, saying, “Or rather we have moved from a world only 30 years ago in which pensioners were much more likely to be poor than their younger counterparts to one in which they are less likely to be poor.”

 

 

 

Although it is true that the total share of pensioners in poverty has significantly declined in the past three decades, millions of retired people still face an uncertain future, where decisions between heating their homes and eating are an all-too common phenomenon.

 

 

 

“Nothing short of scandal”

 

 

 

An October report from Age UK shows the sustained extent of pensioner poverty today—an estimated 1.8m retirees, which amounts to 1 in 6 pensioners, live in poverty. An additional 900,000 live in severe poverty.

 

 

 

Though pensioners may for the first time be less likely to be poor than their younger counterparts, they still constitute the largest group who are on the brink of poverty, with 1.2m retirees living on the edge.

 

 

 

Age UK director Caroline Williams called the millions of pensioners living below the breadline “nothing short of scandal.”

 

 

 

“There are still so many vulnerable older people in the UK living in poverty – unable to afford decent food, heat their home or live an independent life – when billions of pounds in benefits are unclaimed,” Williams said, highlighting a major reason many pensioners struggle.

 

 

 

Age UK found that millions of pounds in pensioner benefits go unclaimed every year, mostly because pensioners aren’t aware of the benefits they’re entitled to.

 

 

 

The charity estimates that some 2.2m pensioners are not claiming their council tax benefit, which can amount to ÂŁ728 per person each year. Another 390,000 older people fail to claim their ÂŁ48 of housing benefit every week. Age UK estimates that ÂŁ5.5bn in pensioner benefits goes unclaimed each year.

 

 

 

Unite national officer for retired members Mike McCartney argues that pensioner poverty is far from being a problem of the past.

 

 

 

“It’s certainly heartening news that poverty among pensioners has been slashed in the past few decades,” McCartney said. “But this is precisely because of continued government support. To cut this support now, as the IFS suggests, would be to scale back all the progress we’ve made thus far.”

 

 

 

“Millions of pensioners still face a precarious future, in which hunger and want are right at their doorstep,” he added. “All it takes is just one personal tragedy, say the death of a partner, to send some of them over the edge into abject poverty.”

 

 

 

What pension?

 

 

 

The media may paint an image of pensioners lounging on yachts off the Mediterranean coast (indeed, the Daily Mail did just that in its recent coverage of pensioners), but the reality for most OAPs is the exact opposite.

 

 

 

One in seven retired people rely only on their basic state pension to cover their living costs, without having the good fortune of a private pension or personal savings.

 

 

 

In the northeast of England, the number of pensioners depending on only the state pension rises to 1 in 5. Women, too, are much more likely to have no other source of income upon retirement.

 

 

 

And how much is this basic pension exactly? A grand total of £113.10 per week, which amounts to less than £6,000 a year—far short of the estimated £8,600 a single pensioner would need to maintain a socially acceptable minimum standard of living, according to the Joseph Rowntree Foundation.

 

 

 

IFS director Johnson warned about the consequences of promising pension increases through the “triple lock” system, which guarantees above-inflation rises to the state pension.

 

 

 

The “triple lock” guarantee is in place now, but it is uncertain whether it will survive beyond the next general election.

 

 

 

While the IFS may view a healthy state pension that keeps up with rising living costs as a financial burden, consider how the UK stacks up against other EU countries’ pension levels.

 

 

 

 

The UK is ranked dead last – behind even Hungary and Slovenia.

 

 

 

In the UK, OAPs who’ve worked hard their entire lives can expect to earn an average of just 30 per cent of their working wage, whereas in Italy, the average is 70 per cent. In the Netherlands, the state pension level compared to average working wages is just over 90 per cent.

 

 

 

In the developed world, only one country fares worse than the UK in terms of state pension pay outs – Mexico.

 

 

 

“Triumph of social policy”

 

 

 

IFS director Paul Johnson claimed that declining pensioner poverty – which dropped from nearly 30 per cent in 1998 to 14 per cent in 2012 – is a “triumph of social policy”, indicating that enhanced state benefits helped millions of OAPs climb out of the depths of financial struggle.

 

 

 

So why, then, is the IFS suggesting a rollback in pensioner benefits?

 

 

 

 

The think tank argued that while pensioners had supposedly become “richer,” they’d done so on the backs of those who work.

 

 

 

McCartney, however, argues that this is a predictable “divide-and-rule” style of politics endemic among the political establishment.

 

 

 

“While it may be true that younger, working-age people have borne the largest brunt of austerity measures, we cannot maintain a just and equal society by pitting one group against the other, as so many politicians are keen on doing,” said McCartney.

 

 

 

 

“We’re all in the struggle against social injustice together,” he added. “Instead of aiming to diminish the progress of some groups, we should aim to ensure that everyone gets a fair chance, whether young or old.”