Disabled people retiring with pensions less than two-thirds of the Brit average, report warns

“Life,” leaving cards exhort, “begins at retirement.” But millions of Brits have very little to look forward to. 

Women, ethnic minorities, disabled people and carers reach retirement age with significantly reduced private pension pots, leaving them thousands of pounds worse off every year. 

The average retired Brit draws £8,500 of private pension income per year. But “underpensioned” groups aren’t so lucky,  according to a new report by the Pension Policy Institute (PPI) and pension provider now:pensions. 

• UK’s state pension is one of the lowest in Europe. It’s the main reason for misery among retirees
• More than 24 million Brits don’t earn enough for a ‘decent standard of living’, report finds
• Pensioners ‘reduced to tears’ by ‘complex’ forms when applying for help from DWP

Disabled people have the lowest pension income at just 43% of the UK average – some £3,650 per year. Women are retiring with 67% of the UK average, with single mothers hit harder (54%). Carers (80%) and ethnic minorities (62%) are also significantly below the national average.

People can be “underpensioned” for any number of reasons: a lifetime spent organising working around the responsibilities of caring, for example. 

But a lack of private pension income means a person is more reliant on the state pension – and more vulnerable to financial shocks. 

The full rate of State Pension is £230.25 a week, though the amount differs according to various qualifying conditions. That’s around £11,900 per year – significantly below the poverty line. 

After three years of surging prices and bills, some 1.9 million British pensioners are living in poverty. The Joseph Rowntree Foundation has separately described the swelling numbers as a “ticking time bomb”.

Private pension income helps older people to stay financially afloat. But “inequalities remain”, said Samantha Gould, head of campaigns at now:pensions. 

“Many underpensioned groups continue to face systemic barriers that limit their ability to save for later life,” she added. “These individuals are more likely to earn lower wages, work part-time, or take time out of employment for caring responsibilities, all of which contribute to lower pension savings and greater financial insecurity in retirement.”

To help close the pension savings gap, the report proposes reforms to the rules around private pensions. 

If you earn more than £10,000 per year, your employer must pay a portion of your salary into a savings pot. But people on low-incomes aren’t auto-enrolled into pension schemes.

This auto-enrolment threshold is unnecessarily tough, says John Adams, senior policy analyst at the PPI and author of the report. 

“Changes to automatic enrolment criteria could make huge strides in pension saving, such as allowing the income from multiple jobs combined to count toward the earnings trigger or removing the earnings trigger entirely.” 

Last year, the government attracted criticism after cutting the universal winter fuel payment. This  sum of up to £300 helps pensioners afford their energy bills – but the government restricted eligibility to those recieving pension credit and other means-tested benefits.

According to the Centre for Ageing Better has found that one in four (25%) of people aged 65 and over are considered too wealthy for help with their energy bills by the government, but too poor to live a “dignified” life according to the minimum income standard established by poverty experts and the public.

It increases to 29% among those aged 74 and over, which equates to 1.4 million people.

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