Pound-for-pound deductions
Some people, including Torsten Bell, the pensions minister, have argued that a major reason for the reduction in pensioner poverty under the Blair government was the rollout of pension credit.
The benefit currently tops up eligible pensioners’ incomes to £238 for single people and £363 for couples, but this is not enough to carry them above the poverty line. It also rises with the triple lock, meaning it cannot narrow the gap between them and richer retirees, who will receive the same boost to their state pensions.
The Department for Work and Pensions also estimates that around a third of pensioners entitled to pension credit, or up to 910,000, still don’t claim it.
Some experts believe that social change across Britain did more to increase retirement incomes and haul households out of poverty. Many married women had historically lived as housewives while their husbands went to work, but as times changed, they began retiring in the 1990s and 2000s with richer career histories and adding to the household income with pensions of their own.
Single women face the worst pensioner poverty
New figures from consultants LCP also revealed that certain groups drove the increase in poverty, despite everyone benefitting from the triple lock.
It found that pensioner couples remained the least likely to be in poverty, but divorced pensioners – the number of which had tripled to 1.5 million since 2004 – faced greater hardship. It also revealed that poverty levels had risen fastest among single pensioners who never married, many of whom were previously in long-term cohabiting relationships.
LCP concluded that single people had almost entirely driven up the number of pensioners living in poverty and, despite their increased individual pension savings, two-thirds of these were women.
Sir Steve Webb, of LCP and a former pensions minister, said: “Some of the discussion around pensioners seems to imply pensioner poverty is largely solved. But since 2012-13, it has been rising steadily, predominantly amongst single pensioners.
“Issues such as inadequate pension sharing at the end of a relationship and the continuing gender pension gap mean that women in particular are at higher risk of poverty in old age.
“We need to look at encouraging couples to share their pension wealth more easily and examine social changes, such as how cohabitation has grown and what this means for later life finances. It is vitally important that the Pensions Commission looks at these issues in depth.”