The UK state pension is failing older people. We need change to protect pensioners

We’d all like to enter later life with an adequate income that provides a stable home, a well-balanced diet, covers the essential bills and allows for an active social life. But this isn’t the reality for far too many older people. There are currently 1.9 million older people living in poverty across the UK. That’s 16% of the older population. This is too high. In a fair and just society, nobody should be left behind as they age.

In Independent Age‘s new report, Too Little, Too Late, we found that too many older people are living on incomes that do not even cover the cost of basic essentials, like food, water and energy.

Even those who receive what they are entitled to are struggling – 20% of older people who receive pension credit are still living in poverty, and the social security system is failing to support everyone in need – as eligibility thresholds are set too high, and amounts are set too low.

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There are up to 700,000 older people facing financial hardship who are ineligible for means-tested financial support. Many describe life on a low income as ‘limiting’, ‘joyless’ and ‘like another lockdown’ – these are heartbreaking findings.

Eight in 10 people aged 65 told us they would not be able to afford essentials if they had to rely solely on the state pension, which is £230.25 per week. Across the whole state pension system, around four million people receive less than the full amounts. This has created a crisis in confidence around the state pension and social security system, with many believing it will not enable them to live well in later life if it’s all they have.

Through our research, we show why certain groups are at greater risk of entering later life with an inadequate income, including societal and structural reasons.

Women make up the majority of basic state pension recipients (5.1 million older women, versus 3.6 million older men). This means any changes to the system such as the state pension age rising, or other factors like gaps in national insurance contributions, will have a disproportionate impact on women.

Women are also more likely to take on a caring role in their working life and are often on the receiving end of the gender pay gap, both of which also affect an individual’s ability to save enough to provide an adequate income in later life.

People from ethnic minority groups are also more likely to retire without an occupational pension, to live in poverty, and to receive lower levels of pension income overall.

This can be the result of long-term structural inequalities, including historic discrimination in work and housing, or it could be because an individual started their working life in another country. The latest figures show that 31% of Black, African, Caribbean and Black British older people and 27% of Asian and Asian British older people live in poverty, compared to 16% of white older people.

What can the UK government do in both the short and long-term to support older people living on inadequate incomes? A pressing concern is the winter fuel payment. Restricting it only to pension credit recipients excludes many older people on low incomes from a crucial lifeline.

Following the announcement, our helpline was inundated with calls, and it created a sense of anxiety, leading to many people cutting back on heating and eating just to get by. That must not happen again this winter. An urgent review of the eligibility threshold is essential so that more older people in financial hardship can receive the support they so need.

Another issue that is causing widespread concern among the older people we support is the freezing of tax thresholds. The personal allowance has been frozen at £12,570 until 2028/29, so with the trajectory of the triple lock, the full new state pension amount will definitely exceed the allowance by April 2027, and it could even happen next year.

This means more older people on already low incomes will be dragged into paying tax, a gaping flaw in the system that creates a worrying contradiction in policy – the government will be giving with one hand and taking away with the other. Instead, it should ensure that the personal allowance amount is always above the full value of the new state pension, otherwise its value will gradually erode.

It’s unacceptable that so many older people are going to bed cold, hungry and worried. We need a cross-party review to establish what an adequate income in later life should be to avoid financial hardship – using the lived experience of older people whose voices are too often not heard by policymakers. Let’s work together and consign pensioner poverty to the history books.

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