Recent data from the Office of National Statistics suggests that 20% of pensioners now enjoy a household income of over £42,000 (Source: Guardian, 2012). On the face of it, this would appear to point us to the inevitable conclusion that older generations are enjoying something of a luxurious lifestyle in their retirement. However, these figures are potentially misleading.
While one in five have an income comparable to many young working couples, official data from Age UK suggests that 14% of pensioners in Britain (around 1.7 million) are living in poverty (Source: Age UK). These figures serve to demonstrate that there is a growing disparity between those at the top and those at the bottom of the pensions earnings pile, much like that seen in workplaces throughout the UK. So what is the truth about pensioners and this apparent rise in income?
Good News and Bad News
It’s a very up and down time for financial news. While the Olympics appeared to have finally pulled the country out of its double dip recession (touch wood) and unemployment is dropping (slowly), retirees have been in for a rough ride. Understandably, many have questioned why some pensioners enjoy an income that is higher than many workers enjoy – particularly in such tough economic times.
However, there are two sides to every coin; in this case, it would appear that the wealthy minority are perhaps hiding a wider issue of pensioners struggling to make ends meet. Late last year, it was revealed that half a million pensioners are continuing to work beyond their retirement date – many simply couldn’t afford not to (Source: This is Money). As we all get older and live longer, maintaining a comfortable lifestyle appears to be getting increasingly difficult for many (Source: This is Money).
Failure to Claim Pension Credit
But while the cost of sustaining an ageing population soars, it would appear that many simply aren’t getting the money they deserve. Figures from Age UK suggest that £5.5 billion in pension provisions aren’t being claimed each year, suggesting that many simply don’t know what they’re owed. This doesn’t infer any kind of deliberate mishandling or misappropriation, but perhaps points to a lack of communication and highlights why some pensioners struggle to get their heads around the benefits system – particularly means-tested aspects.
The primary issue here appears to be the pension credit. This is an additional weekly payment of around £30 made available to those who need it most. With an estimated 1.5 million people failing to take advantage of the scheme, many appear to be missing out unnecessarily. The means-tested system that is currently in place will be removed in 2016 and replaced by a flat-rate pension (£140), ensuring that those who are currently missing out will get a more sizeable pension provision – albeit others would see theirs slashed (Source: Guardian, 2012)
Crossing the Divide
Of course, finances are always an emotive subject. There will always be those that defend the benefits that pensioners receive, while others choose to disparage it. Equally, some people are going to have more disposable income than others, but it’s important that some level of context is maintained.
Sure, there are those that are taking home a lot of money from both state and personal pension provisions. Equally, there are plenty that are struggling to make ends meet. This makes any form of sweeping generalisation impossible. With rising utility costs and food prices, these are difficult times for all; invariably though, with working opportunities limited and income fixed, many pensioners bear the brunt.