'Tidal wave' of pensioner poverty with half of over 50s terrified of retiring
The UK is facing a “tidal wave” of pensioner poverty with almost half of people aged 50 plus scared about retiring.
If the Government fails to act there is a huge danger of a pensioner poverty surge over the next few years, a leading charity for the elderly has warned. According to the latest figures, 18% of people aged 60-64 are living in deep poverty.
Older people’s financial hardship charity, Independent Age, commissioned a YouGov poll of more than 2,200 people. They found that 41 per cent of people aged 50 plus are concerned about living in hardship when they stop working. They found an “overwhelming” 80% of those quizzed thought the weekly rate of the full new State Pension was not enough to cover costs. Of those polled, who are not yet fully retired and renting, a staggering 67% said they were not confident that their retirement income would cover their rent.
They say the maximum pensioners currently get is £203.85 a week but that is due to increase by 8.5 per cent in April. But with the cost of living crisis and massive energy bills, Independent Age says pensioners are “barely surviving” and will continue to “struggle” after the rise. The Pensions and Lifetime Savings Association’s Retirement Living Standards state that £12,800 a year is needed for even a minimum standard of living in retirement.
That is more than £2,000 more than the state pension currently provides. Joanna Elson CBE, Chief Executive of Independent Age, said: “There are far too many older people living in financial hardship, and alarmingly, this new polling indicates that there will be a tidal wave of pensioner poverty without governments across the UK intervening.
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“Nobody should have to experience poverty, it is a tough and isolating way to live, but tragically, it has become commonplace throughout the UK.” With the state pension worth £9,654 a year in 2022–23, experts warn people will have to look at retiring later and building up their savings to avoid a huge drop in their income. The Institute of Fiscal Studies say many are using a private pension to avoid this fall in living standards. They estimate private pension wealth makes up 42% of UK household wealth. In 2021, £115 billion was contributed to workplace pensions by 22.6 million people and their employers.
They point out that people are living longer and may need to retire later and build up their savings. The Office for National Statistics say life expectancy at birth was 79.0 years for males and 82.9 years for females in 2022. Poverty in later life is now at its highest level since 2007/8, with 2.1 million older people already living in poverty. Independent Age said the biggest concern of those not fully retired was having less disposable income, with 56% highlighting this as a worry. Among those polled who are not yet fully retired and who do not plan on fully retiring, 39% said this is because they cannot afford to stop working.
The research also revealed a worrying trend of a widespread lack of understanding about their finances post-retirement.
Almost half, at 48% of respondents, said they didn’t have much knowledge of what financial options would be available to them once retired, while 16% knew nothing at all. When asked about their general financial situation after retirement, 45%
said they didn’t know very much and 11% said they knew nothing at all. Joanna Elson from the charity added: ‘“Governments across the UK must take notice of the warning signs. There are already 2.1 million older people living in poverty and a further million teetering on the edge. Now we have more evidence that many people approaching retirement are struggling financially and could soon be living in poverty.
“More needs to be done to ensure everyone receives the financial support they are entitled to so that no one experiences financial insecurity in older age. It’s essential to improve the lives of older people already living in financial hardship and instil confidence in those approaching retirement. Nobody should be left behind in later life, financially insecure and struggling to get by. Everyone deserves the opportunity to live well as they get older.”
Independent Age is calling for Governments across the nations to increase the uptake of social security payments including Pension Credit. They say this currently has an uptake rate of only 63% across Great Britain. They said the UK Government should also pass the Renters Reform Bill to protect older people in the rental market and utilities should be reduced for pensioners.
There should be an independent Commissioner for older people to raise awareness of the issues impacting those in later life. In April 2021 Government statistics revealed that 22.6 million employees were contributing to a private pension (79 per cent of the workforce). Last year research from SunLife found nearly 7 million people aged over 50 in the UK have no private pension savings.
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