Reasons for Elderly Poverty in the United Kingdom
Having worked for the past 40 to 50 years, most adults feel as though retirement will bring a new lifestyle. This includes feelings of excitement and joy as they think of ways to spend their newfound free time. However, the reality of retirement is far from this expectation in the United Kingdom. The U.K. has the worst poverty rate for the elderly population in Western Europe.

Defined as having an income of 40 percent less than the median average, a significant number of the elderly population in the U.K. faces poverty. A recent study by Professor Bernhard Ebbinghaus at the University of Oxford found that the U.K. is one of five countries that has experienced an increase in the number of people over the age of 65 that are experiencing poverty. The U.K.’s increase is by far the largest compared to other Western European countries. Mainly, there are three reasons for elderly poverty in the United Kingdom.

3 Reasons for Elderly Poverty in the United Kingdom

  1. The State Pension System: The state pension system is extremely strict as to who qualifies for the pension. In order to receive the state pension after reaching the retirement age of 65, one must have 10 qualifying years on their National Insurance record. This means that for 10 years, they must have paid their National Insurance tax while earning over £166 a week from one employer. Meanwhile, those who do not have a National Insurance record must have 35 qualifying years of employment. Because of such intense regulations, many do not qualify for the pension and end up in poverty.
  2. Low Basic Payments: The basic payment that comes with the state pension system is extremely low at £168.60. This only amounts to about 16 percent of average earnings. Because the pension is not enough to sufficiently cover one’s retired life, especially with regard to medical expenses, a portion of those who receive a pension will still find themselves living in poverty.
  3. Means-Tested Supplements: Every sixth pensioner in the United Kingdom received means-tested supplements as a way to bring themselves out of the poverty, expected from the low basic pensions. These supplements include private pensions taken out at most U.K. banks. This also includes workplace final salary pensions, the auto-enrolment scheme for employees and private pensions. Means-tested supplements are effective for some. They often provide an additional source of retirement income; however, they also result in a rise in financial inequality and exacerbate poverty. The government feels less of a need to increase the state pension because of the increase in privatization, meaning those who cannot afford private pensions remain stuck in poverty with no hope of change.

The pension age, set to rise to 66 between the years 2024 and 2026, occurred the last time the pension system changed in 2011. Since 2011, no other changes have taken place. Further, the labor government has refused to undertake any paradigmatic reform actions. This means the current problems of the pension system will likely persist in the future. Unless the government chooses to step in and make a difference, a portion of the elderly population in the U.K. will continue to suffer from poverty.

Living on a low income as an elderly person is extremely difficult. No future sources of income require budgeting every penny. Shopping lists are minimal and they save money for bills, meaning there are no luxuries. Retirement is the time to celebrate the end of work; however, for those living in the U.K., retirement is a burden in itself.

– Shvetali Thatte
Photo: Flickr