A warning has been issued to State Pension-age individuals as the income gap between the poorest pensioners and those on average incomes widens. According to the Institute for Fiscal Studies (IFS), incomes among financially struggling pensioners have only increased by 5% from 2011 and 2022.
Challenges in State Pension and Financial Support Among Pensioners
In earlier years, pensioner incomes had outpaced those of working people, the IFS said, with average pensioner incomes growing by 22% from 2002 and 2011, while incomes for working-age people dropped by 3%.
According to research funded by the Joseph Rowntree Foundation (JRF), the overall incomes of pensioners and working-age individuals grew by 12 to 13% from 2011 to 2022. However, the poorest 10% of elderly people experienced only a 5% increase in their income.
This is due to the fact that the poorest pensioners did not benefit from the increases in private pensions or wages that have aided middle-income pensioners and working-age people.
Analysts argue that more effort is required to increase the uptake of Pension Credit, a benefit that totals £3,500 annually, and can provide up to £8,000 in benefits, such as reduced council tax, housing costs, medical and dental expenses, and a free TV licences for those over 75.
Concerns Over Pension Credit Uptake and Elderly Poverty
Nearly 850,000 individuals over State Pension age could be missing out on Pension Credit. Findings by Independent Age reveal that low uptake of Pension Credit results in an additional £4 billion annual cost to the government in increased NHS and social care spending, driven by the declining health of impoverished elderly people.
Anna Henry, a research economist at the IFS, stated: “Reductions in pensioner poverty seen before 2011 have gradually gone into reverse. The new Government will need to focus on current and future challenges for pensioner incomes, especially those of low-income pensioners, and not assume that everything will always be getting better.”
Peter Matejic, JRF chief analyst, said: “Ministers should note that this report highlights more needs to be done to address the low take-up of Pension Credit which acts as a brake on its power to reduce pensioner poverty. This is a problem across the benefits system, with many people not claiming support they are entitled to. There is no good reason more can't be done to educate and inform people about their entitlement, as well as to simplify the application process.”
In the same context, a DWP spokesperson added: “Ensuring a better deal for the pensioners of today and tomorrow is a priority for this government. We have committed to the Triple Lock and are promoting Pension Credit and its benefits such as help with heating costs to protect pensioners on the lowest incomes.”
