I gave evidence to the work and pensions select committee today on pensioner poverty. They are interested in the causes of pensioner poverty and the role that state pensions and benefits play in ameliorating poverty. We talked about so many things during the hour in which I gave evidence alongside Carl Emmerson (IFS), Carole Easton (Centre for Aging Better), and Peter Matejic (Joseph Rowntree Foundation).
The Committee were really engaged and asked some really incisive questions. A few key points came out of the evidence we all gave.
Housing and the increase in private renting among those who will become pensioners over the next few years are likely to result in higher pensioner poverty rates in the future. If you are spending 30% or less of your income on rent, that is considered affordable, but private renters are currently paying 34% on average. This average hides wide regional variations – In October 2024, average private rent in London was £2,172pcm, compared to £694 in the North East. The average rent for England in October 2024 was £1,106pcm (ONS, 2024). As we said to the committee, there’s only so much we can accomplish with state pension and benefits policy, the UK is sorely in need of more affordable housing and quality housing for those on low incomes and those with disabilities.
Looking at relative poverty hides important variation. While relative pensioner poverty after housing costs has increased since 2014 from 14% to 18% in 2022 and then reduced to 16% in 2023, There has been an increase in material deprivation from 6% to 8% between 2020 and 2023, (DWP). This means that the income line doesn’t tell us everything we need to know about how pensioners are living and whether they can afford basic goods and services.
There are strong causal links between working-life experiences and pensioner outcomes. The people who struggle during working life, e.g., women, ethnic minorities, disabled people, and carers, and people from particular regions and very poor backgrounds have similarly poor outcomes in retirement. As an example, Pakistani and Bangladeshi households have higher than 50% poverty rates during working-life and also tend to have very low private pension incomes. There is a disconnect between the levers used (incentives, penalties etc.) in working life and pensioner benefits that may need to be reviewed, especially in the light of higher levels of economically inactive older people and greater in-work poverty among people of all working ages.
There’s so much more to say than this! I will try to bring some of the other really interesting stats and key points out in later blogs.
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