The charity is calling for an urgent review into what makes up an adequate income in later life, as the State Pension and social security do not provide enough money to meet even minimum living standards.

In their new report, Too Little Too Late, Independent Age calls for a cross-party review on what an adequate income in later life is, to support both today’s pensioners and future generations of older people.

The report comes as new polling by the charity shows that 8 in 10 (81%) aged 65 and over could not afford essentials such as food, water and energy if they lived on the State Pension alone (£230.25 per week).

The report highlights how 13% of all pensioners, and 18% of single pensioners rely entirely on the State Pension and other financial entitlements provided by the state for all of their income.

Many people in later life who receive all they are entitled to are still in financial hardship, with 20% of Pension Credit recipients living in poverty. The social security system is also failing to support everyone in need, as eligibility thresholds and amounts are set too low – with research showing there are up to 700,000 older people in poverty, who are ineligible for means-tested financial support.

Independent Age Chief Executive Joanna Elson, CBE said:

“It is clear that too many older people are living on inadequate incomes that do not even cover the cost of basic essentials. Our helpline is extremely busy. On a daily basis our advisers are hearing dreadful calls from older people who are making painful and drastic cutbacks just to make ends meet. These include not washing regularly to save on water, only having one meal a day and socially isolating themselves as they can’t afford to go out for a hot drink with loved ones. This is a tragedy.

“The main takeaway from our research is the need for all political parties to agree on the adequate income needed in later life to live well. Once this is established, plans must be put in place to support every older person to receive this amount.”

Independent Age analysed why certain groups are at greater risk of having an inadequate income in later life. They found that women are at higher risk than men because of the inequalities and barriers they can face during working life. Older pensioners, aged 75 and over, are more likely to live in poverty because there are more women and one person households in this age demographic, factors that increase the likelihood of living in financial hardship.

The charity also looked into why those from racially minoritised groups are more likely to retire without an occupational private pension and have a lower level of pension income in later life including structural inequality, such as long-term discrimination in relation to work and housing which can occur earlier in life.

Judith, 78, London said:

“Living on a single person’s income is hard. Expenses aren’t halved – it can cost as much to feed one as two. I have a small annuity that I use for my utilities; however, in recent years my utilities have gone up, and more of my annuity is taken away in tax. So, with the income tax thresholds being frozen, my annuity soon won’t cover these bills in full anymore – meaning I will have to top that account up and I have less to get by on.

“Most months I am spending more than is coming in, and I use the small amount of savings I have to make up the difference. This worries me – I own my home, and it is old and in need of work. I’ve stopped having baths as it is too expensive, and I can’t afford to have a shower put in. I was waking up tense every single morning, going over the maths again and again, wondering how long I would be able to cope and manage.”

Recommendations

In the report, Independent Age make a series of recommendations for the UK Government that would improve the lives of older people living in financial hardship. These include:

Resuming Phase 2 of the Pensions Review into pensions adequacy as soon as possible, and considering the needs of current pensioners as part of the scope.
Reviewing and expanding the criteria for accessing Winter Fuel Payment, to ensure it reaches more older people living with an inadequate income.
Ensuring the personal allowance stays above the value of the full New State Pension so that the value of annual uprating is not eroded.
Establishing a Commissioner for Older People and Ageing in England, and an Older People’s Commissioner for Scotland, to act as an independent champion for older people, ensuring the voices of all older people – including those living on a low income – are heard by decision makers.
Joanna Elson continued:

“Latest UK Government figures show there are 1.9 million older people living in poverty and another million hovering precariously on the edge; these are devastating figures. We are particularly worried about those just above the threshold for Pension Credit, and those facing high housing costs. The UK Government needs to implement policies that improve the lives of older people living on low incomes now and lift them out of poverty. In practical terms, this should include a review of the level at which people can receive Winter Fuel Payment and an expansion of the eligibility criteria. The UK Government should also reverse the decision to only award pensioner-age benefits to mixed-age couples when the youngest has reached State Pension age. This policy prevents many older people from boosting their already low income.

“Freezing the income tax thresholds has started to penalise older people living in financial hardship. Last month the gap between the new State Pension and the tax-free personal allowance reduced further to less than £1,000. This means older people with only modest private pensions are now facing a tax liability, adding further pressure to their already stretched budgets. The income tax personal allowance should stay above the level of a full new State Pension, so that those on low incomes do not face further financial strain.”