Billions go unclaimed despite rising poverty

Some of the very poorest pensioners are missing out on billions of benefits, according to the latest government figures analysed in Age UK's Chief Economist's Report.

Published today, Age UK's Chief Economist's Report gives an in-depth insight into the key economic issues affecting older people in the UK and shines a spotlight on poverty and inequality among pensioners.

Download the Chief Economist's Report (PDF - 900K)

Despite formidable progress to reduce pensioner poverty, the report warns that in the decade following the introduction of Pension Credit in 2003, the latest government figures indicate that pensioner poverty is creeping up once again.

The number of people living below the poverty threshold increased from 13% in 2012/13 to 14% in 2013/14. Today, the total number of pensioners living in poverty sits at the 1.6 million mark, with around 900,000 of those living in severe poverty.

This entrenched problem is partly explained by the huge numbers of pensioners who don't claim the benefits that they are entitled to. Around £3.7 billion in benefits designed specifically to help low-income pensioners go unclaimed each year.

In fact, the latest official figures show that around 1.3 million people entitled to Pension Credit, which tops up the income of the poorest pensioners, did not take up this vital benefit in 2013/14. This is an estimated £2.86 billion in total, or an average of around £2,132 per person per year.

In addition around 260,000 pensioners missed out on Housing Benefit during the same period, sacrificing £820 million in total or £3,224 each a year.

Calls for action to end pensioner poverty

Age UK is warning that tens of thousands of pensioners are struggling to afford the basics every day and is once again calling on the government to develop and implement a national strategy to tackle the scandal of pensioner poverty across the UK.

As well as facing a daily challenge to pay for essentials such as food, clothing and energy, around 2.7 million older people are stuck at home and unable to go on a social outing, even just once a month, while 1.2 million pensioners could not replace their cooker if it broke down.

Age UK's analysis also shows worrying signs that inequality among older people is increasing again due to the incomes of poorer pensioners falling faster than those in the top- or middle-income groups.

In real terms, between 2010/11 to 2012/13 incomes of the richest 10% of pensioners dropped 3.8% from £833.95 to £803.00, whereas those in the poorest 10% saw a drop of £165.26 to £156.00 - a 6% fall over the same period.

In response to the report, Caroline Abrahams, Charity Director for Age UK, said: ‘This report shows that the older population is increasingly diverse and characterised by stubbornly persistent levels of poverty.

‘The fact that there is appreciably less pensioner poverty than a generation ago is an achievement we should all be proud of but it's important to remember that there are still 1.6 million very poor older people struggling to make ends meet, with many more apparently heading the same way.

‘Worryingly, the poorest pensioners are losing ground the fastest, leading to a widening gap between 'the haves and the have-nots' among those in retirement.

‘We urgently need a concerted effort to help the most vulnerable. Better access to good quality information and advice, and increased take-up of pensioner benefits would be a good start.

‘A national strategy with firm targets and workable solutions is also long overdue. Ultimately we want to see pensioner poverty halved by 2020 but in the meantime, ensuring that the poorest pensioners receive all the help to which they are entitled would make a huge difference to many lives.'

Professor Jose Iparraguirre, Age UK's Chief Economist and author of the report, said: ‘Most commentators opined that the Summer 2015 Budget left older people untouched. Yet in view of the unacceptable levels of material deprivation and the alarming number of poor pensioners missing out on the benefits they are entitled to, "no news" in this case seems to be "bad news". This report shows there is a lot to do on behalf of those who are most in need.'