Just above the bread line
Living on a Low Income in Later Life
Introduction
3
State support for older people
Summary of research findings
4
Lack of reward for work and savings 25
Summary of Age Concern’s recommendations
5
But there have been improvements…
26
27
The research 6
Age Concern’s comments on overall state
support
Context of research
6
Awareness of benefits available
28
Winter Fuel Payment 29
9
Means testing 30
Transport - a major barrier to having a social life
11
32
33
The cost of a decent standard of living
13
Applying for benefits Age Concern’s comment on the benefit systems
Other factors relating to standard of living
14
The State Pension and the position of women
Age Concern’s comments on standard of living
15
The State Pension
35
Women’s pensions
36
38
A decent standard of living?
A decent standard of living? Managing on a low income
Coping strategies
17
Age Concern’s comment on State Pensions and the position for women
Managing budgets
19
Appendices
20
Research design and participants
40
21
Methodology and survey design
41
Footnotes
42
Unexpected expenses
Additional costs associated with poor health Savings and credit
Age Concern’s comments on managing on a low income
22
23
Introduction
Around one in five older people is living in poverty.
So, although there has been a welcome
Government focus on tackling poverty, and
numbers have fallen in recent years, there is still
much to do. In order to build on the progress
that has been made and inform future policy, we
must not only look at the statistics, but the people
behind them.
This research was intended to do just that – to find
out more about what life is like for older people
living on a low income, as well as to explore their
views on current pensions and benefits and the
impact of recent changes.
This report outlines the research findings and sets
out Age Concern’s comments and policy views on
the issues covered.
Living on a Low Income in Later Life
Summary of research findings
Standard of living
• Most participants felt they could get by on their
income, which was sufficient to cover essential costs
such as fuel and basic food.
• However, many felt they did not have a decent
standard of living because they worried about money
and could not afford things such as clothes that were
not second hand, entertaining friends, holidays, or the
occasional treat.
• Lack of suitable affordable transport was a major
barrier to socialising, in addition to the actual cost of
social activities.
• A decent income was felt to be between £200 and
£250 per week for a single person and £250 to £300
for a couple.
• Other areas raised in relation to people’s standard of
living included: health, access to services, social life,
and relationships.
Managing on a low income
• Strategies for coping on low incomes included:
buying economy food and items near their sell-by date;
using charity shops and car boot sales; heating just
one room; and sharing newspapers and magazines.
• For some, coping was stressful, while for others,
managing on a low income had become a way of life.
• People worried about unexpected financial ‘disasters’,
such as the washing machine or television breaking
down.
• Those with moderate long-term health problems,
who did not qualify for additional benefits or services,
often felt they needed financial or practical assistance,
for example with shopping and cleaning the house.
• Reduced mobility was associated with higher heating
bills.
• Those who had savings were reluctant to use
these because of concerns for future care needs and
funeral costs. Some saved small amounts for specific
expenses, such as Christmas.
Just above the bread line
• Most were opposed to the use of credit on principle
or because of concerns about repayments. However,
some used mail-order catalogues which were not seen
as credit.
View of financial support received
• Participants did not feel that the income they received
was a fair return for the contribution they had made
over their lifetime.
• Some felt that the benefit systems do not reward
work and savings.
• There was a common feeling that the financial support
available to older people has improved, although this
was partly offset by price rises.
The benefit system
• Although participants had some awareness of
the main benefits available, they found the systems
complicated and there was little real understanding.
• There was a lot of support for the lump sum Winter
Fuel Payment. Payments are put towards fuel bills or
other expenses. Some see it as a rebate for fuel already
paid and so feel it can be used for other expenses.
• Among those who had a view about means-testing,
some felt it was necessary to provide support to those
who needed it, while others felt everyone should receive
the same or objected to intrusive procedures.
• Most were unaware of how Pension Credit was
calculated and did not know it rewards savings. When
explained, most felt it was broadly fair, although some
saw it as unnecessarily complicated.
• The process of applying for benefits can be difficult
and complicated, although experiences in applying for
Pension Credit were generally positive.
Pensions and the position of women
• As few people understood how the State Pension
was calculated, it was difficult for them to discuss how
it might be reformed. Adequacy was seen as the most
important issue.
• While there were concerns about the position of
women, in general participants blamed low levels of
pension on the lack of information given rather than the
way their pension was calculated.
• Having some independent income was seen as
important and most would advise younger women
to try to save for a pension. However, some felt that
younger women wouldn’t or couldn’t save.
• Some participants suggested the Government should
have more of a role in educating people, particularly
women, about pensions.
Summary of Age Concern’s recommendations
This research indicates that, while there have been
some improvements in the support given for older
people on low incomes, for many life is still a struggle.
Age Concern believes that all older people should
have a decent income that enables full participation
in society. As the debate continues about the pension
system for the future, we must not forget the position
of current poorer older people. In terms of pensions
and benefits, Age Concern’s recommendations to
Government are:
Pensions
• Ongoing research is needed to establish the level
of income required to enable older people to live a
healthy fulfilling life, in order to provide benchmark
targets for pension provision.
• The state pension should be increased to reduce
the need for means-tested support and ensure that
people gain more from saving for retirement.
• The pension system should be reformed to ensure
women are not penalised for caring or because they
were given limited information about pensions when
they were younger.
• In taking forward debate on pension reform, it is
important that the current systems and key issues are
presented in a clear straightforward way to enable
meaningful public debate.
• Individuals need information and advice to make
informed decisions about pensions and savings and
this should include provision particularly targeted at
women.
Pension Credit and other benefits
• There should be better financial support and low
level services available to meet the needs of people
with moderate disabilities.
• There should be a long-term commitment to maintain
the link between Pension Credit and increases in
average earnings.
• The Government needs to build on current initiatives
to improve the administration of benefits, simplify
systems and increase take-up.
Short-term changes
• The £16,000 savings limit for Council Tax Benefit
and Housing Benefit should be removed to protect
modest savings and align systems.
• To encourage working in later life, the earnings
disregard for Pension Credit and other income-related
benefits should be either substantially increased or
removed altogether.
Living on a Low Income in Later Life
The research
Age Concern commissioned IFF Research Limited
to carry out qualitative research with older people
living on a low income. The aims of the research
were to:
• Understand the reality of living on a low income
for today’s pensioners and explore their views
about: what is a decent standard of living; how they
perceived their own position; what they can afford
and what they have to do without; coping strategies;
ability to save; and use of credit.
• Understand the extent to which changes in the
benefits system have improved conditions for these
individuals and explore the participants’ views on
the financial support provided by the Government.
The research took the form of four qualitative focus
groups and eight in-depth interviews with older
people living on a low income. In total, 34 people
aged 65 to 91 were included.
Low income was defined as having savings of less
than £20,000 and a weekly income of less than
£150 if single, divorced, separated or widowed, or
less than £220 if married or co-habiting – broadly in
line with the levels of income where people would
be likely to qualify for Pension Credit. Respondents
were recruited based on gender, marital status
and age and included individuals who considered
themselves to have moderate or severe disabilities.
More information about the research brief, the
composition of the groups and the profile of those
interviewed in depth is given in the appendix.
Just above the bread line
Context of research
When the Labour Government came to power in 1997
27% of pensioners were living in poverty according to
the most commonly used definition of poverty1. The
most recent figures show this had fallen to 20% in 20034. Reducing the numbers in poverty was and remains
a key policy area although, unlike child poverty, there
are no specific targets for its abolition. The reduction
has been widely welcomed and there are indications
that this will fall further as the impact of Pension Credit
takes full effect2.
An important reason for this improvement has been
increases in state support. The Government’s policy
has been to target additional support through the
means-tested benefit systems, as well as additional
initiatives such as the Winter Fuel Payments and free
television licences for people 75 and over. In contrast,
the state pension has in recent years been generally
uprated in line with prices, which rise more slowly than
average earnings and general living standards.
A flagship policy has been the introduction of Pension
Credit in 2003 which, like the Minimum Income
Guarantee before, tops up income to a certain minimum
level, and provides a new element which is aimed at
rewarding modest savings. These more generous
means-tested benefits have been accompanied by
an unprecedented level of activity by the DWP to
encourage people to claim their entitlements. For the
first time, there has been a Public Service Agreement
take up target of 3 million pensioner households to be
in receipt of Pension Credit by 2006 and 3.2 million
by 2008. The Government has stated that pensioner
households in 2005-06 will be an average of £29 a
week better off than in 1997. The poorest third of
households will be £39 a week better off3.
Yet there have been criticisms of these policies. The
debate continues on whether targeting by income and
savings is a sensible way to use available resources or
whether further means-testing should be resisted due
to the complicated and intrusive assessment required.
Means-testing also results in incomplete take-up and
generally acts as a disincentive. Despite the major
efforts to encourage take-up, around 30% of older
people entitled to Pension Credit are not claiming it,
including 20% of those entitled to the guarantee credit,
aimed at those with the lowest incomes. Take-up levels
for Council Tax Benefit are even lower.
Age Concern strongly supports the need to ensure a
decent and sustainable system for future older people,
but we also believe it is important to assess the impact
of policies for current older people and to continue to
tackle poverty and low income.
Older people have also been badly hit by increases in
Council Tax bills and fuel bills. And although increases
in prices affect inflation measures, and therefore feed
into increases in pensions and benefits, this takes time.
Those with low incomes often pay a higher proportion
of their income towards essential bills and may be
hardest hit.
Most of the current focus on pensions is around
the position for future older people. The Pensions
Commission was set up by the Government specifically
to consider the position of long-term savings. In its
November 2005 report the Commission recommended:
a more generous state pension system to prevent an
increase in means-testing; better provision for women
and carers; the introduction of a new state saving
scheme; and the need to accept that better state
support will require increased expenditure and, over
time, a higher state pension age. The Government
is considering its response but, even if proposals are
accepted, the measures to improve state pensions will
not come into effect for some time and the main aim is
to achieve long-term security.
Living on a Low Income in Later Life
A decent standard of living?
A decent standard of living?
General views of living standards:
Most participants felt they could get by on their
income, which was sufficient to cover essential costs
such as fuel and basic food.
However, many felt they did not have a decent
standard of living because they worried about money
and could not afford things such as clothes that were
not second hand, entertaining friends, holidays, or
the occasional treat.
Most participants felt that their income was enough to
get by and that they were existing just above the bread
line. Some compared their standard of living favourably
to that of pensioners they knew when they were much
younger, whose income was insufficient to enable them
to feed and/or clothe themselves.
However, although most agreed that they had an
acceptable standard of living, few described it as
decent. They generally felt that, in order to have a
decent standard of living, they would need to be able
to afford some small luxuries or to go on outings or
holidays to bring some variety into their lives. Hence
their view was that the financial support provided by
the Government was insufficient to allow a decent
standard of living.
‘I don’t drink, I don’t smoke, neither does my husband.
I never go on holiday, I can’t afford to go on holiday, so
where’s our quality of life?’
‘I’m not starving but I still can’t afford to go on holiday.
Our money does go on food, heating bills, electricity,
and our telephone which is vital. We can live.’
‘It does feel like you are a second-class citizen. I mean,
you get barely enough to live on. When you become a
pensioner, you’re not supposed to enjoy yourself or go
out or have a holiday or anything. This is the way you
are treated.’
‘(For a decent standard of living) You’ve got to be able
to afford to go on holiday, perhaps a few luxuries and
to buy a few presents.’
‘I wouldn’t say it was good, but we do manage. It’s not
on a higher level where you can afford holidays abroad
twice a year which to me is good living. It’s just above
the bread line.’
‘I guess it is comfortable. That is pretty much all you
can say though, isn’t it? You’ve got no extras. You have
to think twice about things don’t you? And if you want
anything then you’ve got to save for it. If it’s a tin of
paint, you’ve got to sort of work your money out. You
have to budget.’
On the whole, older pensioners were more positive
about the standard of living they were able to afford
than younger pensioners. This was a combination
of the fact that these pensioners were often entitled
to a greater range of benefits (several were receiving
Attendance Allowance for example) and also for some
it seemed that their poorer health meant they had fewer
desires to do some of the activities that others wanted
to do but could not afford.
Living on a Low Income in Later Life
A decent standard of living?
Most people were in agreement that the level of income
they received was enough to enable them to:
• Buy enough food and drink (although from limited
ranges)
• Buy sufficient clothes to keep them warm (but not
always new clothes and not those that were particularly
fashionable)
• Pay for enough heating to keep warm in the winter
(as a result of the assistance provided by the Winter
Fuel Allowance)
• Cope with small household emergencies (such as
household equipment breaking down)
• Have a telephone
• Run a television (although with the assistance of a
free television license for older pensioners)
• Socialise on a limited basis.
Some pensioners felt that it was difficult to describe
their standard of living as decent, simply because they
worried about money and spent all their monthly or
weekly income on ‘basics’. Most of the discussions
about what they would like to be able to do, but were
unable to afford, focussed on social activities.
Participants stated that they found it difficult to afford
the entrance fees for some of the social activities that
they had enjoyed pre-retirement, such as the cinema,
theatre, football matches or concerts. Others mentioned
that they were unable to afford to have a meal out or to
spend an evening in the pub. Some pensioners stated
that they were able to afford the cinema and the theatre
on occasion by going to pensioners’ performances
that charged reduced rates. A couple of (younger)
pensioners stated that they felt it was a shame that
this reduced the amount of interaction they had with
people of other ages.
10 Just above the bread line
‘Because you can’t go to pubs and places like that then
you miss out on the social life. The fact that you are
meeting people of all kinds of generations, of all different
incomes with all different points of view. I’m talking about
going out on your own and meeting new people and not
going as a sort of club. I’m not a ‘joiner’.’
In addition to socialising at the level that they would
like to, nearly all pensioners also agreed that they were
unable to afford to:
• Take holidays.
• Entertain friends (most of those with families managed
to entertain relatives once in a while).
Other things that some pensioners mentioned they
had to cope without were:
• Clothes that were not second hand.
• Hair cuts at a barbers / hairdressers (some pensioners
tended to cut their own hair or get their partner to cut
it for them).
People also often found it difficult to afford presents
for relatives, but were prepared to make considerable
sacrifices to ensure that they could give presents to
grandchildren at least. A sum of £10 was generally
agreed to be an acceptable present and with several
grandchildren this could easily add up to a considerable
expense (particularly at Christmas).
Transport – a major barrier to having a social life
Lack of suitable affordable transport was a major
barrier to socialising, in addition to the actual cost of
social activities. In terms of continuing a social life, there was considerable
agreement that transport was one of the key difficulties
faced by pensioners surviving on a low income. A few
of those participating in the research were running
cars, but this was often because the car had been
purchased by a family member (or while they were still
working in the case of younger pensioners) and several
received help from family members in meeting running
costs. Most did not have an independent means of
transport.
While pensioners appreciated that they had free access
to local public transport, many stated that they were
unwilling to use public transport in the evening because
of concerns about personal safety. Some (mostly single)
pensioners mentioned that the evenings were when
they tended to feel most lonely and would most like to
be able to get out of the house. Others had found that
public transport did not run either close enough to their
home or to the places that they wanted to visit.
‘I’d like to go up to the City at night but it’s too damned
dangerous. It’s getting dangerous on our roads now
because you see there’s no police walking about and
that’s always the same.’
‘Everything is on in the evenings and at weekends, I
see it all in the papers. I would love to go to some of
that but you can’t get there. There’s no transport and
even if there was you would get dropped off too far
from your home. You daren’t walk alone in the dark.’
Living on a Low Income in Later Life
11 Transport
‘I’d like to go to the theatre but I can’t afford to go.
Getting a taxi there and back. Anything a bit out of the
ordinary is something you can’t afford to do. And you
see it in the paper, visit here and there but you can’t
afford to go. The transport that’s what it is.’
‘Transport is the big problem. You can’t get out to do
all the things by the ring road on the bus. You want to
do these things at the weekend and in the evenings
but for security reasons you don’t want to be hacking
around on foot.’
Some made use of a local voluntary transport scheme
(which a few had been introduced to by Age Concern)
which offers pensioners a taxi service at a reduced rate.
However, while this is a service that they found very
useful for attending appointments (e.g. at the doctors
or the hairdressers), they found it more difficult to use
for socialising. This is partly a result of there simply
being fewer drivers prepared to work in the evening and
partly as a result of the advance notice required by the
scheme; pensioners found it difficult to state several
days in advance when they would feel up to going out.
‘You’ve got to give them at least 4 days notice so that
they can find a driver to fit your times. But you don’t
know how you’ll feel in 4 days do you?’
‘You’ve got to pre-book. You can’t just say ‘Look at the
weather, I want to go and do such and such.’ You’ve
got the freedom that you didn’t have when you were
working but not the money to use it.’
Several also made use of outings organised by various
clubs and societies that provided the required transport
at a subsidised rate. Most pensioners were comfortable
with this as a solution to the need to socialise. A few
found the loss of independence that this form of
socialising represents difficult to get used to.
12 Just above the bread line
‘I want to be my own person and do my own thing
when I choose rather than arrange it weeks ahead.
Your independence is really curtailed. I would like to
go across town to a decent pub I know there where I
can rub shoulders with all kinds of people. Maybe meet
people I haven’t seen for years and just pay my own way
and get home safely. And that’s out of the question.’
The cost of a decent standard of living
A decent income was felt to be between £200 and
£250 for a single person and £250 to £300 for a
couple.
When asked, pensioners stated that they felt an
income of somewhere between £200 and £250
for single people and £250 to £300 a week for
a couple would allow them a decent standard of
living. This represents an increase of at least £50
to £80 per week on the income that single people
were receiving and at least £30 to £80 on the
current income of couples.
When asked directly whether an additional £5 a
week would make a difference to them, nearly
all pensioners agreed that it would. Most felt that
they would use this sort of increase in income to
purchase better quality or more varied food. One
or two stated that they would buy better quality
clothes. An increase of around £10 per week was
more likely to be used to fund socialising or simply
to ensure that a bit more money was put aside for
household emergencies.
‘Well. You could do the niceties that you don’t do
now. You could go out once a week or a month
for a meal or something. When you get older that’s
what you want really.’
‘It would be nice to have it because then you
could maybe buy something without having to
trade down. I certainly buy the cheapest tennis
shoes during sale time that I can. I see youngsters
walking around in trainers I can’t afford.’
Living on a Low Income in Later Life
13 Other factors relating to standard of living
Other areas raised in relation to people’s standard of
living included: health, access to services, social life
and relationships.
Even when questions focussed on financial issues,
the responses covered a wide range of other areas,
demonstrating that people saw their standard of living
as being about more than just money. In addition to
the need for better transport, participants talked about:
health; access to services; their neighbours and the
neighbourhood they lived in; relationships with family
and friends; their pets, and social activities.
While they talked about the difficulties they and other
older people faced, they also spoke of the positive
aspects of their lives and the things that they enjoyed
doing. Comments also demonstrated the active roles
that some played in their families and communities.
14 Just above the bread line
Age Concern’s comments on standard of living
Views expressed by both the focus groups and
individual interviewees show a consistent picture of
older people managing to cover their basic needs but
often little more than that. Age Concern believes that
all older people should have a standard of living that
enables full participation in the community.
The current level of Pension Credit is similar but not
identical to income levels that represent the most
commonly used definitions of poverty. While it is
difficult to define exactly what people need to avoid
poverty, it is generally accepted that, as long as people
receive their full benefit entitlements, the current
benefit system will provide enough to avoid poverty.
However, recent research carried out on behalf of
Age Concern by researchers at the London School of
Hygiene and Tropical Medicine indicates people may
need a somewhat higher income to be able to afford
the minimum requirements for a healthy lifestyle4. For
example it found that the amount of money people
need to spend on a healthy diet, which provides the
nutrition required to carry out recommended levels of
exercise, is around 30% more than the amount people
on a low income actually spend.
In the debate on future and current pensions, it is essential
that we have an ongoing programme of research that
can give an indication of the minimum income needed
for a decent standard of living. Without this, it will be
difficult to judge whether we have the right systems
in place. Whilst this report is focussed on income, our
research demonstrates the other influences on standard
of living, such as access to transport, and shows the
importance of looking broadly at the quality of later life.
Recommendation
Ongoing research is needed to establish the level of
income that is required to enable older people to live
a healthy fulfilling life, in order to provide benchmark
targets for pension provision.
We have also previously commissioned research on
what is needed by people aged 65 to 74 with no health
problems for a ‘modest but adequate’ or ‘reasonable’
level of income. The suggested figures at today’s
prices are around £220 a week for a single tenant
and around £175 for a single homeowner5. Neither of
these research studies looked at the specific additional
needs that some older people face, for example due to
long-term disability or illness.
Living on a Low Income in Later Life
15 Managing on a low income
Coping strategies
Strategies for coping on low incomes included: buying
economy food and items near their sell-by date; using
charity shops and car boot sales; heating just one
room; and sharing newspapers and magazines.
Pensioners agreed that they were able to afford enough
food and drink. However, they stated that this was only
possible through buying primarily from the economy
ranges in the cheaper supermarkets and making use
of offers such as ‘two for one’. Some also mentioned
that they timed their weekly shop to make sure they
took advantage of the reductions made on food close
to its sell-by date. Some mentioned that the increase in
income that they had seen over the last few years (as
a result of improvements in benefits) had allowed them
to occasionally buy better quality food as a treat.
‘If you go to the supermarkets, particularly on a Sunday,
if you go down about 3pm – they shut at 4 so they start
reducing their stuff. We’ve had meat that costs £4 or
£5 for as little as 50p because of the sell-by date.’
Again, all felt that they were able to buy enough clothes
to meet necessity. However, most purchased at least
some of their clothes from charity shops or car boot
sales. Others used markets or cheaper stores. In
addition, some used mail order catalogues that allowed
payment in monthly instalments.
‘There are actually some good charity shops about.
If you go to some of the nicer areas then you get nicer
stuff in the charity shops.’
‘I’m not embarrassed with all of you here but I’d like for
once to go to a shop and buy something. All what I’ve
got on I’ve bought from the car boot sale.’
Car boot sales, along with pound shops, were also
mentioned as a key source of cheap household
equipment such as crockery and glasses.
‘You’ve got that pound shop up the road, you can get
enough stuff from there. There’s nice stuff there – lovely
dishes.’
‘You can always go to a car boot if you’re short on
crockery.’
Several pensioners mentioned the importance of
newspapers and magazines to keep them in-touch
with the outside world and to help pass the time.
To cut down on the cost of these, some pensioners
clubbed together with others to share newspapers and
magazines.
‘That’s what we do, Hetty gives me her evening paper.
I get the magazine and we pass them all on – we all
seem to do that.’
‘There’s eight of us and we buy a couple of women’s
books and pass them all round to each other. When
my husband was first out of work, a friend said as long
as you don’t mind and won’t be offended then we’ll
see you once a week and we’ll bring you the papers
round. We buy a newspaper and the books and just
pass them round.’
Another strategy for cutting costs mentioned by a
couple of older people was only to have the heating
on in one room and to close the doors to the rest of
the house. Some felt that such an approach was still
necessary even since the Winter Fuel Payment because
of the particularly high setting that they needed the
heating on in order to feel warm.
Living on a Low Income in Later Life
17 Coping strategies
‘You don’t have to have the heating on the same
amount in all rooms do you? When you’ve got a family,
you need it on in all rooms but as long as you can
afford to keep one room warm then that’s all that I think
is important.’
Several pensioners mentioned the cost of Christmas
as a serious worry. A few used the ‘savings stamps’
schemes run by supermarkets to spread the cost of
Christmas expenses.
‘You go shopping at Tescos and they do these stamps
and then at Christmas you’ve got that bit extra. You’ve
got to do it that way. When we fetch our pension we save
a bit that way because we’ve got seven grandchildren
so you have to think ahead all the time so that you can
keep that little standard you’ve got.’
18 Just above the bread line
Managing budgets
For some, coping was stressful, while for others,
managing on a low income had become a way
of life.
Pensioners split reasonably evenly into those who felt
that managing their budget was stressful and those
who stated that they were so used to having to manage
money carefully that it was almost second nature.
‘Money is a worry yes. It’s health and money together
are the two main things and then how the family are
getting on. Those are the three anxieties.’
‘We only go once a fortnight to get our pension and
then we pay the papers, we fill the car with petrol, we
pay all the bills that mount up in two weeks and then
what’s left we live on. But we make sure first that we
pay all these bills off and sort out saving for Christmas
and all that, we do all that and then the rest is ours…’
Nearly all pensioners were using direct debits to pay
their regular bills. Some stated specifically that changing
over to direct debits had made it considerably easier
for them to manage their budgets. It was comforting
to average out their heating bills over the year so that
they entered the winter knowing their account was in
credit.
Some tended to manage their money on a weekly basis
and others managed their money monthly. In either
case, the general approach was to pay all bills at the
beginning of the week or month and then to manage
for the rest of the week or month on what remained.
‘Well my pension goes in the bank and I just have to
keep checking that I haven’t spent too much. And then
if I’ve overspent I just have to cut right down.’
‘We do struggle and we always end up not being able
to save a penny. We’ve got to save here and save
there – I don’t mean putting money away. I don’t have
enough to put anything away. I just have to watch what
I’ve got. Once I’ve paid all my dues, I just say well roll
on Monday and let’s draw my pension.’
‘It’s really just a day-to-day existence. You can’t save
up for anything.’
Living on a Low Income in Later Life
19 Unexpected expenses
People worried about unexpected ‘disasters’
such as the washing machine or television
breaking down.
All pensioners mentioned that they were always worried
that some form of unexpected ‘disaster’ would take
place (such as the washing machine or the television
breaking down). Most tried to put any money that they
had left over from their weekly or monthly income aside
for this type of expense. Some also used any money
that they received as gifts into this ‘pot’. On occasions
when something in the house had broken down and they
were unable to afford to fix it, they had simply managed
without it until they could afford to have it mended.
‘It’s just about alright your pension but if something in
your house breaks down like your fridge then you’ve
got to scrimp and save to sort it out.’
‘We’re all right and we can go on like this unless
something like the boiler goes wrong or something.’
All found the costs of machines breaking down a
particular worry because of the call-out charges for
engineers, regardless of whether or not they are able
to fix the equipment. Because many pensioners have
very old machines, they are concerned that they will
have to pay a call-out charge only to be told that the
machine can not be mended. A couple of participants
mentioned that they would like to be able to take their
equipment (TVs, toasters, computers etc.) into repair
shops as they usually offer free estimates. ‘I would like to take my equipment in somewhere to get
fixed and not pay for someone to come out and fix it,
paying the surcharge every time.’
20 Just above the bread line
Unexpected expenses of a less urgent nature (typically
repairs to the house) were largely left undone or the
services of friends and family were enlisted.
An up-coming expense that several pensioners
expressed concern over was the fee associated with
the advent of digital TV. Most were heavily reliant on the
television for entertainment and were unsure about the
cost implications of switching over to digital. ‘A lot of old people never go out so I think they ought to
give them a free licence…, because in the winter that’s
all they do isn’t it? Watch telly.’
‘Everybody’s got to go digital soon. And how are you
going to pay for that?’
Additional costs associated with poor health
Those with moderate long-term health problems,
who did not qualify for additional benefits or
services, often felt they needed financial or
practical assistance, for example with shopping
or cleaning the house.
Reduced mobility was associated with higher
heating bills.
Around two-thirds of those taking part in the research
suffered from either moderate or severe health
problems. When asked whether this led to additional
expenses that were difficult to meet, opinions were
divided. The consensus view seemed to be that serious
health problems generally meant that you were able to
get additional support (both financial and otherwise)
from the DWP and the local Council. This included
personal care for tasks such as washing and dressing
and assistance with necessary modifications to the
home.
However, people felt it was much more difficult to
secure assistance for long-term health problems that
were debilitating but not severe enough to meet the
criteria for a disabled classification. The pensioners who
had encountered this problem were mostly suffering
either from arthritis or hip or joint problems. They had
found that, because they were able to wash and dress
themselves, they had been deemed by the authorities
not to need additional support. Some felt unable to
easily and safely use the bath and/or found cleaning
the house or getting out to the shops very difficult. In
these cases pensioners had not been able to afford the
modifications to their home or the additional help that
they would like and had suffered a reduced standard
of living and increased risk of accidental injury as a
result.
‘I should like to have a bath that lowers you in because
I can’t use the bath now. I have arthritis in my fingers
but because I don’t look disabled I can’t get any help
with things like that.’
‘Social Services criteria are just - Can you wash and
dress yourself? I could but I was stuck in the house
and couldn’t do any shopping. I asked for help but
was told to get on the telephone and ring up Tescos
because there was nothing they could do. Because
my shower is in the bath, I couldn’t get into the shower
and I couldn’t shower for a week. To me that was
absolutely dreadful.’
‘It’s just silly stuff, like if things are bad and I’m really
stuck but I haven’t got any milk then who can I get to
go and get me some milk. There is no one prepared to
give that sort of assistance. They all want to come in
and get you dressed!’
Aside from these expenses, some pensioners felt that
the reduced movement that was possible as a result
of their health problems meant that they spent more
of the day sitting still than able-bodied pensioners and
hence tended to feel the cold more. As a result, they
felt that they accumulated larger heating bills.
‘The trouble is when you’re disabled you can’t walk
about as fast as everybody else so that when winter
comes you’re cold – so what do you do? – you stick
on the heating so that nearly all the money goes on
heating because I need the warmth.’
‘Since his operation my husband feels the cold terribly.
He has to sit up night times in bed because he can’t lie
down because he’s sick or burping all night long and
he really feels the cold.’
Living on a Low Income in Later Life
21 Savings and credit
Those who had savings were reluctant to use
these because of concerns for future care needs
and funeral costs. Some saved up small amounts
for specific expenses such as Christmas.
‘The only thing I worry about is, because I’m older than
Tom, if I came to a point when I couldn’t manage and
I had to go into a home, the money would have to be
paid so that would mean our savings.’
Most were opposed to the use of credit
on principle or because of concerns about
repayments. However, some used mail-order
catalogues which were not seen as credit.
Aside from the savings that they had built up during
their working lives, a few stated that they were able to
save small amounts of money on a weekly or monthly
basis for the types of unplanned expenses mentioned
above or for Christmas.
The older people taking part in the research had a
maximum of £20,000 in savings. Nearly all of those who
had savings did not allow themselves to cut into these
savings on a regular basis. A few had used savings to
pay for things such as household repairs, but generally
they were keen to leave their savings intact to pay for
the costs of residential care should they need it and/or
funeral expenses.
Most of the participants were opposed to the use of
credit. Only one had a bank loan (taken out during a
period of ill-health while he was still working). A few
had overdraft facilities on their bank account but none
made use of them. Some (younger) pensioners had
taken out credit cards simply because it enabled them
to pay for goods and services over the telephone but
all were paying their account in full each month.
Those who were intending to use their savings to cover
funeral expenses felt very keenly that they wanted to
ensure their death would not have cost implications for
their relatives. These pensioners felt regret and some
guilt that they would not be leaving much in the way of
an inheritance for their family.
The reluctance to make use of credit stemmed partly
from a belief that to be in debt was bad per se, partly
from fear of not being able to repay any debts without
a regular wage coming in and partly because of
concerns about the ‘extortionate’ charges made by
credit providers.
‘I do say you are always thinking you’ve got to leave
enough for your funeral, don’t you once you get old?
You think – well even though I won’t be there – you
must leave something to be buried or whatever.’
‘If we can’t afford it then we go without. I think as well a
lot of it is to do with the way you are brought up. I don’t
know about you ladies but I was brought up that if you
haven’t got the money you don’t have it.’
Those who were concerned about the costs of
residential care were worried that their savings would
be inadequate should they need looking after in this
way. They were extremely unwilling to eat into their
savings for any sort of day-to-day expenditure in case
this were to prove necessary.
However, some pensioners mentioned that they used
mail-order catalogues to buy clothes and other items
because this enabled them to pay for goods in small
monthly amounts. Interestingly, this wasn’t viewed as
using ‘credit’.
22 Just above the bread line
Age Concern’s comments on managing on a low income
Although people managed on their income, this was
due to good management and careful budgeting and
many were concerned at the possibility of additional
expenses. However, the research also emphasised
different individual responses – for some, coping on a
low budget was stressful, whereas others seemed to
manage without too much worry. This may represent
different circumstances or different approaches to life.
However, the research does show that, for many, just
to get by requires considerable effort and ingenuity,
and for some causes much stress and anxiety.
Recommendations
There should be better financial support and
low level services available to meet the needs of
people with moderate disabilities.
The £16,000 savings limit for Council Tax Benefit
and Housing Benefit should be removed to
protect modest savings and align systems.
The research indicated the limited availability of services
and financial assistance available for those with
moderate disabilities. Both the Department of Health’s
social care green paper6 and the Social Exclusion
Unit’s interim report on older people7 emphasise the
importance of low level preventative help and the views
expressed in this research back this up.
The importance of maintaining modest savings was
recognised when Pension Credit was introduced
as this benefit has no upper savings limit (although
savings over £6,000 reduce benefit). Age Concern
believes a similar rule should be applied to Council Tax
and Housing Benefit.
This group of low income older people were clear in
their opposition to the use of credit – they preferred to
cut down and do without rather than get into debt. This
is typical of views expressed by older people, although
attitudes among some may be changing. People who
enter retirement now will have been more used to using
credit cards and other forms of credit. Age Concern’s
local and national information services are increasingly
being contacted by people with concerns about debt
and we expect this trend to continue.
Living on a Low Income in Later Life
23 State support for older people
Lack of reward for work and savings
Participants did not feel that the income they
received was a fair return for the contribution
they had made over their lifetime.
Some felt that the benefit systems do not reward
work and savings.
The participants tended to consider that the benefits
they received were not a fair return for their contribution
to society. While older people on low incomes can
survive on the pensions and benefits provided by the
Government, as discussed earlier, most luxuries are
entirely out of their reach.
‘No, definitely not. Not in any way really, apart from you
do get your pension but you’ve paid for it. I’ve worked,
I’ve paid National Insurance and everything.’ Those who had small occupational pensions felt that
they were penalised for having made this saving during
their working lives because the income from their
occupational pension made them ineligible for some
means-tested benefits.
‘If you’ve been daft enough to go out to work don’t
even bother to ask. If you’ve ever been out to work
don’t ask for anything else because you won’t get it.’
‘You talk about Social Services, they’re caring for my
dad every morning but he still has to pay. And I think
at his age he shouldn’t have to pay for things. That
annoys me. But he did work and he worked at ICI
for all his life and he gets a pension, and because of
that he can’t get nothing. He can’t get free glasses or
nothing like that because he saved for a pension when
he was at work. And so now, at 93, he’s having to pay
for virtually everything. And it annoys me sometimes.’
A number of pensioners mentioned that they felt it was
unreasonable that they were unable to undertake any
kind of work in retirement without this impacting on the
level of benefits they received. This felt to them ‘unfair’
as it prevented them from both improving their standard
of living through additional income and enjoying the
social interaction that a part-time job would facilitate.
‘If I want to go and do a little job then I can only earn
£5 before they start taking things off me….I’m quite
healthy, I’d love to have a little job but if they are going
to take money off you…If you got a job cleaning that
would cost you more than that to come up on the
bus wouldn’t it? Isn’t that ridiculous? That’s what my
papers say – I can earn £5.’
‘It wasn’t worth me going out to work because we only
ended up £10 better off so I had to give up my job.
Now I didn’t want to give up my job because I was
meeting people and everything but I had to give it up.’
Some felt that the financial support they received was
out of keeping with the contribution that they had made
to society, when compared with the levels of support
they perceived to be provided for single mothers or
young families, the unemployed and asylum seekers.
They felt they were treated like ‘second class citizens’
in comparison to these other groups.
‘People, like myself, who’ve worked for 40 years and
paid stamps all their life, I think they deserve more
than people who’ve come into the country and get full
benefits.’
‘When we were young you went to work. It was
the thing to do. But not today. So if they’re paying
hundreds and hundreds of people for doing nothing,
how have they got money left for us?’
Living on a Low Income in Later Life
25 But there have been improvements…
There was a common feeling that the financial
support available to older people had improved,
although this was partly offset by price rises.
Despite concerns about the levels of income they
received, people generally had noticed a difference in
their standard of living.
‘I don’t worry so much about my bills as I used to. I
used to think ‘how can I manage on so little money?’,
being on my own but now I can comfortably put the
heat up a little bit or have a little luxury and little treat,
a bar of chocolate or something, whereas before I was
hanging on for every penny I got and never knew what
was coming.’
‘I think it’s got better because the fuel allowance is a
big help. You’re not frightened now to put your heating
on.’
‘It used to be a worry but not now. When I first retired
30 years ago, I wasn’t getting so much money.’
‘…You have more money but it’s costing more to
live…’
‘They don’t seem to be going up with the rate of
increase in bills.’
‘The Council Tax went up by 14%… but the pension
didn’t go up by that much.’
‘I think what makes pensioners sore, at least what
makes me sore, is the huge difference between what
working and earning people are able to afford and
what pensioners can afford now. Our income as a
percentage of the ordinary, of the average income is
so poor.’
‘You go to the supermarket and every week things
have gone up because the petrol’s gone up, or the fuel
puts the price up. And you don’t get an increase then
to cover that. I don’t know about other people, but I
have to look twice at what I buy.’
‘It should be pro-rata to wages rather than the retail
price index.’
‘I think it’s improved, definitely improved.’
However, many other people felt that the improvement
in benefits was offset at least partly (and in some cases
entirely) by increases in the cost of living. A common
view was that benefits for pensioners had failed to keep
up with rises in day-to-day expenses. Increases in the
cost of fuel were particularly mentioned as eroding the
real value of increases in benefits provided.
‘I think we have a bit more money in our pockets but
the cost of living has gone up so much that that money
is not buying as much as it used to. So as this lady
here says you have got to count the pennies.’
26 Just above the bread line
In comparison to the support their grandparents’
generation received, however, most respondents
acknowledged an improvement for older people.
‘I think pensioners live better than years ago.’
Age Concern’s comments on overall state support
Fairness was an important theme throughout the
research. People felt they had worked hard and
contributed to society and it was unfair that they had to
manage on low incomes. However, many did recognise
that improvements have been made. This shows that
Government policy is making a difference to people’s
day to day experiences, although there is still more to
be done.
The savings credit was introduced in order to reward
savings, but people have little understanding of how it
works. However, even though people are nearly always
better off from having saved, the impact may not be
great. For example, someone in receipt of savings credit,
Housing Benefit and Council Tax Benefit can find they
are only a £1 better off from receiving a private pension
of £10 a week. The introduction of savings credit, while
well intentioned, does not fully resolve the problem of
savings not being rewarded. The increasing gap between
the level of the basic pension and the level of Pension
Credit will bring more people into the means-testing
system if current uprating policies are maintained.
Like the Pensions Commission, Age Concern believes
it would be unacceptable not to continue to uprate
Pension Credit in line with earnings over the long-term.
The Government has made a commitment to continue
this link for the rest of this Parliament. Our research
shows that current benefits are by no means overgenerous. If the link with earnings is broken in the future,
the relative incomes of the poorest older people will fall.
Age Concern believes that the level of means-testing
within the system should be reduced by increasing the
level of state pension.
A number of participants raised the problem of not
being able to work without losing benefits. Currently in
most situations only £5 of earnings for a single person
and £10 for a couple is ignored for Pension Credit and
other benefits – these limits have been unchanged
since Income Support was introduced in 1988. The
Government wishes to encourage people to work
longer and many would welcome the opportunity to
supplement their income in this way. Increasing the
earnings disregard or removing it altogether would
simplify the system and enable greater participation.
In some cases people felt that other groups received
better support than they did. However, given that most
had little understanding of the benefits system, it is
unlikely that they actually knew much about the levels of
benefits received by different groups. For example, the
level of Jobseeker’s Allowance paid to an unemployed
person is less than half the rate of basic Pension Credit
guarantee. Recommendations
The state pension should be increased to
reduce the need for means-tested support and
ensure that people gain more from saving for
retirement.
There should be a long-term commitment to
maintain the link between Pension Credit and
increases in average earnings.
To encourage working in later life, the earnings
disregard for Pension Credit and other incomerelated benefits should be either substantially
increased or removed altogether.
Living on a Low Income in Later Life
27 Awareness of benefits available
Although participants had some awareness
of the main benefits available, they found the
systems complicated and there was little real
understanding.
The older people involved in the research had
reasonable awareness of the range of benefits that
existed for those on low incomes. Most knew of the
following benefits (although did not necessarily know
the proper names):
• Pension Credit
• Council Tax Benefit
• Housing Benefit
• Winter Fuel Payments
• Additional pension for those aged 80+
• Attendance allowance
However, few had a detailed knowledge or
understanding of the way in which these benefits
operate, even if they were in receipt of them. Most could
give only a vague explanation of eligibility. Respondents
usually used phrases such as ‘at a certain age,’ or
‘over a certain level of income,’ rather than being able
to state the specific criteria.
Several stated explicitly that they found the benefits
system very complicated – leading to questions about
why there could not be a single state pension rather
than a system that delivered assistance to pensioners
under a variety of different guises.
‘I’ve got about seven pages telling me what I’m
receiving. Why do they have to say your state pension is
£75 and then put this extra on that you are entitled to?
Why don’t they just put it all down at the beginning?’
28 Just above the bread line
Some were further confused by the interaction
between different benefits that they had experienced –
for example, the receipt of Pension Credit leading to a
reduction in the amount of Housing Benefit or Council
Tax Benefit received8.
Quite a few pensioners were unsure if there might be
benefits that they were entitled to but not claiming,
again stemming from a limited understanding of the
eligibility criteria for retirement benefits.
Winter fuel payment
There is a lot of support for the lump sum Winter
Fuel Payment.
Payments are put towards fuel bills or other
expenses. Some see it as a rebate for fuel
already paid for, so feel it can be used for other
expenses.
The research found the advent of the Winter Fuel
Payment is a very welcome addition to the portfolio
of support offered by the Government; many older
people on low incomes are now able either to use
heating where they could not before, or simply worry
less about turning the heating on.
Some people put it aside to pay for their winter fuel
bills while others put it into their fund for unexpected
expenses. Others spent it on luxuries they would not
normally be able to afford. These included Christmas
presents or buying ‘something for the house’. Because
a number of pensioners paid for their fuel bills by direct
debit, the Winter Fuel Payment was sometimes seen
as a rebate on expenses already met and hence
pensioners felt it was justifiable to use the money for
purposes other than fuel bills.
‘[I spend it] in the house. If there’s something I want.
Like a new carpet or decorating’.
‘It helps to pay some bills as well.’
‘It is a godsend it really is because we can have our
heating on now whereas before you had it on in the
mornings then it went off and you had to wait until the
evenings. But now we can have it on more when it’s
really cold. My husband feels the cold dreadfully.’
In nearly all cases the Winter Fuel Payment made a
contribution towards heating expenses rather than
meeting the full cost of winter heating.
Pensioners were universally in agreement that having
the payment made in a lump sum was preferable to
receiving a weekly or monthly amount.
The payment was clearly very popular and, unlike
many other benefits, easily understood. Yet the
dilemma between providing simple universal benefits
and targeted help was highlighted by one person who
knew of someone very well off who still received his
payment – ‘he won’t even notice he’s got it’.
‘You’d hardly see it, would you, if it was paid weekly’.
‘I spend a lot more than that on fuel’.
‘It’s good to have it in a lump sum, because you
wouldn’t set that aside [otherwise]. It’s for your winter
fuel, so you’re not afraid to put your heating on and
it’s nice to have that lump sum coming in to cover that
winter bill rather than having a couple of quid a week.’
Living on a Low Income in Later Life
29 Means testing
Among those who had a view about meanstesting, some felt it was necessary to provide
support to those who needed it, while others
felt that everyone should receive the same or
objected to intrusive procedures.
it irritates me but the fact is she really doesn’t need
any top-ups in pensions and such like, she is actually
very wealthy and for everybody, including her, to get
any kind of miserable increase in the pension is not
reasonable.’
Most were unaware of how Pension Credit was
calculated or did not know it rewards savings.
When explained, most felt it was broadly
fair, although some saw it as unnecessarily
complicated.
‘Yes, but on the other hand I’ve got friends in the same
circumstances and her argument is she’s paid high
taxes and she’s paid all her life into pensions et cetera
– so why shouldn’t she get as much as anybody who
hasn’t bothered to pay into a pension. Why should she
be any different?’
Participants were asked whether they felt that means
testing was a ‘fair’ way of determining what benefits
individuals received. Because of the limited awareness
that pensioners had of the way in which benefits are
determined, few had given much thought to whether
or not the systems used to make these calculations
are fair.
Some people disliked the perceived intrusion into their
personal finances that means-testing necessitates and
felt it was degrading to fill in the forms applying for
benefits. These individuals were not always opposed to
the concept of means-testing but more the procedures
that it is necessary to go through in order to obtain
means-tested benefits.
However, those respondents who did comment on
means-testing as a way of establishing levels of benefits
were divided in their opinions. Some felt that meanstesting was necessary to ensure that people who require
extra income receive it while minimising the cost to the
Government. Others felt that everyone should receive
the same and thus reward those who paid into private
pensions or savings before retirement.
‘Well, the number of forms you have to fill in. And they
duplicate themselves. They’re trying to catch you out.
You know, are you telling us the truth…’
‘I can’t see any other way, we would all like our
pension to be increased as an overall thing, but then
obviously if they increased it enough for people to
cover attendance and whatever that would cost so
much money because people would be getting it who
don’t actually need it anyway – so I’m quite happy to
be means-tested. I think it’s fair. I have a friend who
is completely at the other end of the income scale to
me. She’s retired, she’s practically rich and sometimes
30 Just above the bread line
‘And they want to know all your personal finances and
everything else. All your bank accounts, who’s living
in the house, and things like that. You should have a
good pension so you wouldn’t have to go begging.’
Others tended to feel that the intrusion is actually worth
it if they receive more money as a result.
‘…A lot of people object to being means-tested. I
actually don’t. I think it’s fair… It’s just like filling in a tax
form… and so what if at the end of the day that means
you are entitled to some extra money coming in. I don’t
mind being means-tested, not at all.’
The principle behind the system for calculating Pension
Credit, where a minimum income is guaranteed and
some reward is available for those who have made
modest savings, was also discussed with respondents.
Pensioners were generally unaware that this was the
way in which Pension Credit was calculated.
Whilst it seemed broadly ‘fair’ to most people, some
saw it as unnecessarily complicated. While the
principle of having a top-up scheme so that everyone
received a minimum pension was seen as fair, some
felt that having to apply to top-up their pension was an
unnecessary inconvenience.
‘Why don’t they put it all down [on your pension] in the
beginning?’
There did not appear to be much awareness that
Pension Credit aims to reward pensioners for having
savings. One woman stated that she was receiving
Savings Credit but was under the impression that this
was a separate benefit.
Living on a Low Income in Later Life
31 Applying for benefits
The process of applying for benefits can be
difficult and complicated, although experiences
in applying for Pension Credit were generally
positive.
The participants found the benefits system and the
application process for benefits such as Housing Benefit,
Council Tax Benefit, Pension Credit and Attendance
Allowance to be complicated. Some feel that they lack
the necessary skills to deal with the forms involved. Others are concerned that the questions on the forms
are deliberately trying to ‘trick’ them. The perception
that the application process would be difficult led some
people to delay claiming some of these benefits.
‘It’s taken me about a week of banging my head against
the thing, to work out mine. I could in the end but I
wouldn’t recommend it.’
‘I never had O Levels or anything like that. I’m just not
capable of filling out any forms like that. So you just
put it to one side. It’s too complicated.’
‘It’s a bit intimidating when you have to go through all
this rigmarole.’
‘…A lot of people won’t claim because of the simple
fact of all the information you’ve got to try and provide. Last year it took me about four hours to fill in the forms
to make an application for Attendance Allowance. And
in the end I didn’t get it.’
However, in terms of applications for Pension Credit
specifically, experiences tended to be positive. The
general consensus was that applying over the telephone
for Pension Credit was a satisfactory experience, with
the phone operators seen as friendly and helpful.
32 Just above the bread line
‘I rang them and I got through straightaway and
someone I spoke to, he was marvellous, lovely young
chap, and he said “yes, you are entitled to it”.’ ‘Oh yes, they were very nice the way they spoke,
I admit that, they were very nice.’
One or two people had experienced considerable
delays in receiving their additional money.
‘I applied in November and eventually they done it in
August last year… I kept ringing them up and saying
have you forgot about it but I can fill the forms in and
they said ‘Oh no Mrs H, we’ve got the forms here and
yes we are looking at it but we’ve got such a backlog
of work’, that’s what they told me, ‘but you will be
getting it…’
Age Concern’s comment on the benefit systems
It is unsurprising that the research found that older
people thought the benefits system is complicated
and only had a general awareness of what is available.
One benefit which is understood is the Winter Fuel
Payment, which was introduced in 1997 and is now
worth £200 for most households containing someone
aged 60 or over and £300 where there is someone
aged at least 80. Age Concern has welcomed the
additional income that older people receive from the
Winter Fuel Payment, although we have argued that
older people should have sufficient income to pay bills
without additional payments and concessions.
The positive responses in this study show the real
difference that Winter Fuel Payments make. Although
we have generally supported higher pensions rather
than additional payments, we note that when asked,
people showed a preference for lump sum payments.
This is in keeping with the general impression of people
managing but only just getting by. The fact that a lump
sum of £200 made a considerable difference indicates
the low level of resources that participants had. Despite its attempts to encourage take-up, the
DWP may not meet its 2006 Pension Credit takeup target and, even if it does, this will only represent
around three-quarters of those entitled to receive the
benefit. Although we welcome the additional support
provided by Pension Credit, as stated earlier Age
Concern would like to see the need for means-testing
reduced through higher pensions. However, even if
there are improvements to pensions, Age Concern
recognises that there will always be a need for meanstested support. It is therefore important that current
Government initiatives to increase take-up and improve
administration continue.
Recommendation
The Government needs to build on current
initiatives to improve the process of administering
benefits, simplify systems and increase take-up.
Although the participants did not understand all the
details of the systems, their comments and views
reflected ongoing policy debates about the role of
means-testing. Whilst people can see the reasons for
focussing support on those that need it, some felt that
this meant those who have worked and saved receive
less. For others, the intrusive nature and complexity
of the claim process were the main problems with
means-testing. The administration of means-tested benefits is always
going to be more complicated than that of non-meanstested pensions and take-up is always likely to be
significantly lower.
Living on a Low Income in Later Life
33 The State Pension and
the position of women
The State Pension
As few people understood how the State
Pension was calculated, it was difficult for them
to discuss how it might be reformed. Adequacy
was seen as the most important issue.
The older people who took part in the research had
a poor understanding of the way in which the state
pension is calculated. They were aware that pensioners
received different levels of state pension but were unsure
why this was. In some cases they were of the opinion
that it depended on the amount that had been paid into
occupational pensions. Some pensioners who received
less than the full level of state pension had expected
to receive a full pension and had been unpleasantly
surprised when they reached retirement. The fact that
payment of the married woman’s stamp would lead to a
lower level of state pension was broadly understood, but
many women were unaware that periods of not working
(because of caring responsibilities or other reasons)
would impact on the level of pension they received.
The majority of pensioners were aware that those
aged over 80 received an additional sum on their state
pension. Nearly all knew that this was an additional
25p per week. This was not seen to be a large enough
amount to be of any substantive benefit. Indeed, most
referred to this benefit as “insulting”.
‘It doesn’t even buy you a paper.’
‘It’s ridiculous.’
‘I wouldn’t even give my great-grandchildren 25p –
that’s absolutely insulting.’
Low levels of understanding of the current system for
calculating state pensions made it difficult to discuss
alternatives that would be ‘fairer’. One said, ‘I tend to
think it’s fair but complicated’ but others, when asked
about basing the pension on the length of residency, felt
this would be fairer. However, this was seen by some of
the older people in the study as a way of ensuring that
those who had worked and had other responsibilities
would receive more than those who had moved to
the country recently and indicates that many people
are not clear about how the current system works. In
general though, when asked about how the pension
should be calculated, respondents had more concern
with the adequacy of their income compared to the
cost of living, than with the fairness of pensions vis à
vis specific contribution.
Living on a Low Income in Later Life
35 The position of women
While there were some concerns about the
position of women, in general participants blamed
low levels of pension on the lack of information
given rather than the way their pension was
calculated.
Having some independent income was seen as
important and most would advise younger women
to try to save for a pension. However, some felt
that younger women wouldn’t or couldn’t save.
Some participants suggested the Government
should have more of a role in educating people,
particularly women, about pensions.
Most of the women participating in the research who
were or had been married had their pension based on
their husband’s National Insurance contributions rather
than their own. Most had worked at some point but
had paid the married woman’s reduced stamp.
Women were asked specifically for views about how
they were treated within the pensions and benefits
systems. There were a few comments about the
system being unfair to women and some referred to
the situation when they were younger when it was
often accepted that women would stay at home.
‘No I don’t think that women get a fair deal in some
things. Why should women get less than men? Why
should they? They give more.’
‘My sister in law is retired and she hardly gets anything.
Her husband is still alive but she hardly gets anything
and she’s worked and she’s rather annoyed about it.’
36 Just above the bread line
‘You had your children and you stayed at home and
brought them up.’
‘All those years of when you did the low stamp as a
married women that was assuming that the man would
be earning enough of a pension for the two of you and
that you would be entitled to a share of his pension.’
However, many of the women did not feel badly treated
in relation to men or other women who had not had
caring responsibilities. Participants tended to hold the
opinion that basing pensions on the number of years in
the workforce was fair. This attitude was not because
they felt that caring duties were less important than
work, but seemed to result from a strong sense that
hard work should be rewarded.
When women felt that the level of pension they were
receiving was unfair, this tended to be because they
felt they had not been given enough information when
they were working about how their pension would be
calculated. They felt that this had disadvantaged them,
rather than that the system for calculating pensions was
unfair. These sorts of comments tended to be made in
relation to the impact of paying the married woman’s
stamp or having breaks from working to care for children.
On the whole, they seemed to feel that this inequality
will be less of an issue for younger women who they
consider to participate more fully in the workforce.
To make their state pension arrangements fairer,
women who had paid the reduced stamp or had
breaks to fulfil caring responsibilities would ideally
like to see an increase in the state pension that they
receive. However, they were not necessarily calling for
an equalisation with those who had full contributions
– more that the minimum level of state pension should
be higher.
Women (including those in couples) generally felt that
it was important for women to have at least some
independent income in retirement. The reasons given
for this were that ‘then you don’t have to ask for
everything’ or simply in terms of safeguarding against
the future ‘you never know what is going to happen
that might mean you need your own money’.
Some married women felt that the fact that Pension
Credit uses a joint income to calculate entitlement
disadvantaged women. They felt that Pension Credit
should be paid to the individual rather than the couple to
allow greater independence for women (and to recognise
that women often receive very low state pensions).
‘It is an unfair thing to do because that puts the man
in charge, doesn’t it? There is no equal rights there is
there? Definitely, no, there is no equal rights there.’
The women interviewed stated that they never gave
much thought to pensions when they were younger.
Pensions were not high on their agendas when
looking after a family and/or making a living. This was
compounded by the fact that pensions were not so
commonly spoken about by their generation.
‘Looking after your children, you don’t think about
when you get older.’
They were asked what advice they would give to
younger women currently in the workforce. In most
cases their advice was to try to save in some form of
occupational or personal pension to supplement the
state pension in retirement. There was a strong feeling,
as might be expected, among the group of single
women, that being financially independent was very
important for women.
‘I think you need your own [pension] don’t you?’
‘You could be married at the time but then things don’t
always work out do they?’
However, one or two who had had bad experiences
with private pension schemes were more negative;
‘It was the worst thing I ever did, and I’ll say it to
anybody – do not pay all that pension because you
lose out on everything.’
But generally pensioners felt that any advice would fall
on deaf ears:
‘I don’t think there’d be many young people who would
listen. The mortgage and that and children, they can’t
worry about pensions.’
‘The wages around this way are not very good wages
are they? When they get a house, they’ve got the
mortgage, the insurance, the rates and by the time of all
that they’ve got nothing left to put by for a pension.’
Several people suggested that the Government should
have more of a role in educating people, particularly
women, about pensions.
‘I think a lot of women are very naïve. When I was
divorced I sort of said I don’t want any of your pension,
which I shouldn’t have done really, because it left
me struggling. I think older women aren’t educated
financially. Women need more information about what
they can get and how to get it.’
‘There’s some quite frightening programmes on, which
really shake young people up if they watch them. But
to me they’re on at a stupid time, they’re on during
the day when hopefully a lot of them are at work.
They should be on at a time when young people are
watching the television’
Living on a Low Income in Later Life
37 Age Concern’s comment on the State Pension and the position of women
The researchers asked people whether they thought
the current system was fair in general and in particular
for women. They also discussed whether it would be
fairer to base the pension on residency rather than
contributions. People found it difficult to express
views about the pension system as it was seen as
complicated and was often little understood. Some
thought that basing pensions on residency was fair
although in other parts of the discussions the general
feeling was that work should be rewarded.
The Government wants to involve the public in debate
on the future of pensions but this will be difficult to do
without a better level of understanding. The Citizen’s
Jury organised by Age Concern9 is an example of
helping people to contribute from a more informed
position, as jurors had an opportunity to hear evidence
from experts and learn about the trade-offs involved in
pension reform.
Age Concern has been campaigning for fairer pensions
for women and carers so we were interested in the
views of older women about the system. Among women
reaching 60 now only a third are entitled to receive the
full basic state pension – for around a quarter this is
based just on their own contributions while the rest rely
on the contributions of their late or former husband10.
The picture is changing because: more women work
and pay NI contributions; few now pay the reduced rate
contributions which do not bring pension rights; and the
introduction of home responsibilities protection (HRP)
in1978 now protects parents and some carers. The
DWP state that men and women under pension age are
now equally likely to be paying contributions and that by
2025 around 80% of both men and women reaching
state pension age will be entitled to a full pension.
It is perhaps surprising that, although the women felt
that caring was equally important to paid work and
38 Just above the bread line
some felt the system was unfair to women, in general
there seemed to be little resentment that time spent
caring was not fully recognised in the pension system.
Instead people felt that it was important that work was
rewarded and they were concerned about the lack of
information they received. However, as stated above,
it was difficult for the women to comment in detail
given their limited understanding of the complicated
systems.
In terms of the lack of understanding of the impact of
paying the reduced rate National Insurance and caring,
this is an issue that has been frequently raised by older
women contacting Age Concern. It is interesting that,
while emphasising the importance of better information
for younger women, the participants questioned whether
such advice would be heeded or indeed whether people
could afford to save more. This begs the question of
whether they themselves would have acted differently
had they been given better information.
The current pension system was designed in the
1940s and many of the women in our study would not
have been able to benefit from changes such as the
introduction of home responsibilities protection in 1978.
Regardless of whether women themselves blame the
lack of appropriate information or the system for their
often low levels of pension, at this stage, for those
already retired, the way forward must be to reform
the system to provide better support. Age Concern
would like to see a more inclusive pension through a
reform to the contributory system (e.g. by reducing the
number of years for a full pension) or the introduction of
a residency based pension. We welcome the Pensions
Commission emphasis on the need to improve the
system for women and carers and the recommendation
that women aged 75 should receive a full pension
regardless of contribution record.
Recommendations
The pension system should be reformed to
ensure women are not penalised for caring or
because they had been given limited information
about pensions when they were younger.
In taking forward debate on pension reform, it
is important that the current systems and key
issues are presented in a clear straightforward
way to enable meaningful public debate.
Individuals need information and advice to make
informed decisions about pensions and savings
and this should include provision particularly
targeted at women.
Living on a Low Income in Later Life
39 Research design and participants
Age Concern commissioned IFF Research Limited to carry out qualitative research with older people on a low
income. The objectives of this research were as follows:
• Understand the reality of surviving on a low income for today’s pensioners and the extent of the struggle that
they face in terms of:
o What they are able to afford and what they have to do without;
o How they manage budgets;
o Whether they are forced to use credit of varying forms;
o The extent of stress caused by survival on a low income.
• Understand the extent to which changes in the benefits system have improved conditions for these
individuals;
• Ascertain their views on the support provided by the Government for older people.
40 Just above the bread line
Methodology and survey design
The research took the form of four qualitative focus groups and eight in-depth interviews. 26 pensioners living on
a low income took part in the discussion groups. Low income was defined as having savings of less than £20,000
and a weekly income of less than £150 if single, divorced, separated or widowed, or less than £220 if married or
co-habiting. Respondents were recruited based on gender, marital status and age. Additionally, each group aimed
to include some individuals who considered themselves to have moderate or severe disabilities11. Two participants
were from ethnic minorities. The composition of the groups is set out in the table below.
Table 2.1 Profile of focus group participants
Group
Marital status
Gender
Age
Disabilities
1 (Norwich)
(6 respondents)
Married / co-habiting/ widowed
All female
1 x 65-68 years
5 x 69+ years
3 x none
1 x moderate
2 x severe
2 (Norwich)
(8 respondents)
Single/ divorced/
separated
5 x female
3 x male
2 x 65-68 years
6 x 69+ years
2 x none
4 x moderate
2 x severe
3 (Birmingham)
(5 respondents)
Single/ divorced/
separated
All female
All 69+ years
2 x none
2 x moderate
1 x severe
4 (Birmingham)
(7 respondents)
Married / co-habiting/ widowed
4 x female
3 x male
2 x 65-68 years
5 x 69+ years
3 x none
3 x moderate
1 x severe
Respondents for the depth interviews were recruited according to the same criteria. Table 2.2 shows the profile
of respondents for this element of the research.
Table 2.2 Profile of depth interview participants
Marital status
Gender
Age
Disabilities
1
Married
Female
91
None
2
Divorced
Female
66
None
3
Married
Female
69
Moderate
4
Divorced
Female
65
None
5
Widowed
Male
70
None
6
Divorced
Male
69
Moderate
7
Married
Male
65
Moderate
8
Married
Male
81
Moderate
Living on a Low Income in Later Life
41 Footnotes
Households below average income 2003-04, DWP, 2005. The poverty measure referred to is 60% contemporary
median household income after housing costs. It is a relative measure that looks at the position of the least welloff in relation to the rest of the population.
2
Pension Credit and delivery of services to ethnic minority clients: Government responses to the Committee’s
3rd and 4th reports of Session 2004-05. House of Commons paper. 2005. 3
House of Commons, Hansard 7 July 2005, col 619W.
4
Minimum income for healthy living: older people. LSHTM/Age Concern, 2005.
5
Modest but adequate – a reasonable living standard for people aged 64-74. Family Budget Unit 2002. (Figures
uprated broadly in line with earnings to 2005 levels).
6
Independence, Well-being and Choice: Our vision for the future of social care for adults in England. Department
of Health, March 2005.
7
Excluded Older People: Social Exclusion Unit Interim Report. Social Exclusion Unit, March 2005.
8
Although pension credit guarantee is not taken into account for Housing and Council Tax Benefit, savings credit
is counted as income. So, if someone is awarded savings credit alone, other benefits may be reduced – although
overall they will still be better off.
9
Citizens’ jury on pensions reform. Report by Age Concern England, 2005.
10
Women and pensions – the evidence, DWP, 2005.
11
The question used to ascertain whether or not individuals had any form of disability was: Do you have any
long-term illness, health problem or disability which limits your daily activities? IF YES – Would you describe this
as being severe or moderate?
1
42 Just above the bread line
Age Concern
Age Concern is the UK’s largest organisation working for and with older
people. In England, we are a federation of around 400 charities working
together to promote the well-being of all older people.
Age Concern’s work ranges from providing vital local services to
influencing public opinion and government. Every day we are in touch
with thousands of older people from all kinds of backgrounds - enabling
them to make more of life.
IFF
IFF is an independent full-service research agency specialising in public
sector and social research. Since 1965, we have been providing insight
into the issues faced by disadvantaged groups within society and
evaluating policies designed to improve their daily lives.
Written by Lorna Adams, IFF and Sally West, Age Concern
Published by Age Concern England, February 2006
Age Concern England
Astral House
1268 London Road
London SW16 4ER
Tel: +44 (0)20 8765 7200
www.ageconcern.org.uk
Registered Charity No. 261794
Lorna Adams
Director
IFF Research Ltd.
Chart House
16 Chart Street
London N1 6DD