Rise in pension age has led to surge in poverty

One in seven 65-year-olds have been pushed into income poverty as a direct result of the Government’s move to raise the state pension age, new research shows.

Raising the state pension age for men and women from 65 to 66 means that income poverty rates among 65-year-olds have more than doubled, with nearly 100,000 people pushed into subsistence by the end of 2020, according to the Institute for Fiscal Studies.

The rise in the state pension age between 2018 and 2020 has meant 700,000 65-year olds have had to wait another year before they could receive payments worth £ 142 per week.

Across this period, the absolute income poverty rate for people of this age soared from 10pc to 24pc.

The higher state pension age also encouraged nearly one in 10 (9pc) 65-year-olds to stay in their jobs and retire later.

Those who were less likely to be in work at age 65, and therefore have less private income, were the group hit hardest. These people were more likely to be less well-educated, single, and living in rented accommodation.

Amongst single people aged 65, the income poverty rate jumped from 16pc to 38pc. Amongst renters aged 65, the rate surged from 22 per cent to 46 per cent.

The Government has raised the state pension age because average life expectancy is increasing. However, Baroness Ros Altmann, a former pensions minister, heavily criticized this move as a policy that hits the most disadvantaged groups hardest.

“The scale of increased poverty caused by the rise in state pension starting age is further evidence that the blunt cost-saving tool of increasing state pension age increases social injustice.

“Forcing everyone to wait longer because average life expectancy has risen ignores the near 20-year differential in healthy life expectancy across the UK,” Baroness Altmann said.

The most disadvantaged 10pc of people in the country only remain in good health until they are 50, while the top 10pc are in good health until age 70, on average, she added.

Laurence O’Brien, co-author of the IFS report, said: “We found that 14pc of 65-year-olds were in income poverty in late 2020 as a direct result of the state pension age rising from 65 to 66.”

Emily Andrews, of the Center for Aging Better, the charity which funded the IFS report, said: “These statistics are shocking and show the number of 65-year-olds in absolute poverty rose from one in ten before the state pension age increase to almost one in four just two years later. “

The impact of raising the overall state pension age from 65 to 66 was higher than that of the Government’s earlier move to raise the women’s state pension age from 60 to 65. This was because people are more reliant on state support at older ages. The gap in state support for those nearing the state pension age has also widened.

Raising the state pension age from 65 to 66 has boosted public finances by £ 4.9bn per year, equivalent to 5pc of annual government spending on state pensions.

The Government plans to further raise the state pension age to 68. There is an ongoing independent review of the state pension age for the Department for Work and Pensions.

Ms Andrews called on the Government to improve access to work for people in their 60s, to invest in tailored employment support for those out of work, and to review how the social security system supports people as they age.

A Government spokesman said: “We know that older workers, including those approaching State Pension age, are a huge asset to our economy while for those who can’t work, we provide a strong welfare safety net, which includes Universal Credit.

“We also understand that people are struggling with rising prices which is why we have acted to protect millions of the most vulnerable through at least £ 1,200 of direct payments this year, and there is a wealth of additional financial support available when people reach State Pension age, including Pension Credit – which unlocks an additional £ 650 cost of living payment for those currently claiming it – and Winter Fuel Payments. “

.

Leave a Reply

Your email address will not be published.