UK pensioners suffer massive increase in poverty

Thomas Scripps

The proportion of pensioners living in severe poverty, receiving less than 40 percent of median household income, has climbed to five times the level of 1986. This is an increase from 0.9 percent to 5 percent. It is the largest increase among western European countries, taking the UK from one of the lowest rates to the fourth highest.

The figures are from a new study titled “Pension Reforms and Old Age Inequalities in Europe.” The report’s author, Professor Bernhard Ebbinghaus, explained in highly muted language, “The United Kingdom is a good example of the Beveridge-lite systems that have historically failed to combat old-age poverty. ... These have rather ungenerous basic pensions with means-tested supplements, and this reproduces relatively high severe poverty rates among the elderly.”

The state pension in the UK is a pitiful £8,767 per year. Average spending for a one-person retired household is an already incredibly low £13,265, with many forced to cut costs in all directions, but this still leaves a roughly £4,500 shortfall.

The report also found that those European countries that had made private pensions an important source of income for the elderly had seen a rise in financial inequality. “The comparison shows that the shift toward increasing privatisation amplifies the already existing level of social inequality,” Ebbinghaus said.

The figures underscore the persistent social evil of old-age poverty in the UK, which in the last seven years has begun to grow once again. Almost 18 percent of pensioners—nearly 2 million people—are in relative poverty, receiving less than 60 percent of median household income, up from 13 percent in 2011/2012. This means that the reduction in the catastrophic pensioner poverty rates of the late 1980s and the 1990s (of up to 40 percent) has been halted and, since 2012, been going into reverse.

The first sharp rise in pensioner poverty in the post-war period took place from the mid-1980s after a two-decade fall, as the British ruling elite launched an all-out assault on the social gains of the working class and inequality began to skyrocket. General poverty rates among old people then declined by two thirds from a late 1980s peak to the early 2010s.

However, this highly uneven process, which still left hundreds of thousands in dire financial straits, was shattered by the 2008 financial crash and government austerity. The crisis of world capitalism, in which the British banks were bailed out to the tune of £1 trillion from the public purse, set the stage for a new collapse in the living standards of many pensioners.

Recent rises in pensioner poverty have been caused by the housing crisis and welfare benefits cuts in particular. Around 20 percent of pensioners are now forced to privately rent their homes, and this proportion is increasing thanks to the lack of affordable housing. Sky-high rents mean that the poverty rate for these households is more than 35 percent, nearly double the level for pensioners in general. The freeze on housing benefit has exacerbated the problem.

In February, the government announced another benefit cut, specifically hitting retirees’ incomes. Under Department of Work and Pensions (DWP) plans, pension credit is being withdrawn from all pensioners with working-age partners. This will affect 15,000 couples this year and 60,000 by 2023-2024. These households will be left up to £7,000 a year worse-off, and those in social homes will be liable to pay the bedroom tax—an average £15 a week loss in income.