The majority of government support for older people over recent years is through the means-tested benefits system, rather than significant increases in the state pension.
As a result new research commissioned by older people’s charity Age Concern finds that many pensioners are being forced to live just above the breadline with enough money for food, heating and accommodation but little else.
The report highlights how for many older people going out for a meal, spending a day with friends or a night out at the pub is beyond their reach.
“It’s appalling that so many older people face a daily struggle to make ends meet,” says Age Concern’s director-general Gordon Lishman.
The findings show what a grind life can be for many older people, despite new government figures this week showing numbers of pensioners living in poverty are down.
The charity calls for an increase in the state pension to reduce the need for means-tested support and to ensure that more people gain from saving for retirement. It says that means-testing requires complicated and intrusive assessments and generally acts as a disincentive for people to claim benefits.
The charity adds that despite unprecedented levels of activity by the Department for Work and Pensions to increase take-up of some benefits, there is still widespread under-claiming with around 30 per cent of older people entitled to pension credit not claiming it.
The process for applying for benefits was found to be difficult and complicated and the charity has called on the government to try to simplify the system to help increase take-up.
Anna Pearson, policy officer for older people’s charity Help the Aged, agrees that benefit underclaiming is a problem and says it is not just confined to pension credit. Over two million older people entitled to council tax benefit are also not claiming, she says.
Pearson supports the call for an increase in the state pension, arguing that some older people are reluctant to claim benefits believing they have got enough money when in reality the extra cash would make a lot of difference.
“People often think I can manage on £100 a week but that’s £100 a week for life,” she says.
Increase state pension
The basic state pension for a single person will be £84.25 a week from April. Age Concern says this should increase to £109. Help the Aged’s Pearson argues it should be upped to at least £114.05, the amount due to those who qualify for pension credit.
Caroline Bernard, policy and communications manager at older people’s charity Counsel and Care, agrees that a lot of older people don’t like taking benefits even though they are entitled to them and agrees the state pension needs to be increased.
The research highlights the popularity of the winter fuel payment, an annual one off payment of between £100 and £300 which is not means- tested and available for all people aged 60 and over. Although Pearson praises the policy she says the sum needs to be increased and argues that perhaps the payment could be expanded to cover some other expenses due to its success.
Bernard says that even with the payment it is difficult for older people to make ends meet due to the cost of fuel and other unavoidable costs such as council tax increasing at a faster rate than pensions.
The research describes a number of coping mechanisms used by older people in order to get by. These include buying second hand clothes, economy or reduced price food and only heating one room at home. Pearson says an inability to socialise or eat healthily due to a lack of money can have knock on effects for people’s mental and physical health but it is difficult to prove poverty is directly responsible for such problems.
However, Bernard says research has shown a definite link between poverty and social exclusion. It’s crucial that older people are given enough to enable them to have a life beyond just surviving in order to avoid this, she adds.
The study also found some older people keen to leave any savings they had untouched in order to pay for possible care home fees in the future, despite having to live frugally to do so. Pearson says she has come across this desire to save in order to not be a “burden” on relatives.
“People don’t want to have less than a couple of thousand of savings because they want to pay for their own funeral,” she explains.
Sometimes simply giving older people money is not as helpful as providing other more creative solutions, she says.
“We do think the government needs to look hard at other ways of improving things for older people,” says Pearson. “Free bus passes are coming in this April for all pensioners. That’s the kind of thing that can make a difference.”
Attitudes to credit
One of the most marked difference between how younger and older people manage their money is attitudes to credit. While living your live by borrowing large amounts of money is the norm for many young people, Bernard says that for the majority of older people taking out credit is simply not something they would do.
While having obvious dangers Pearson says that using loans sensibly can help to improve some people’s situations and argues the banks need to do more to provide tailored packages for older people and that initiatives such as the Social Fund need to work more effectively.
The pensions commission was set up by the government in 2005 to look at how to improve the pensions landscape. In a report last November it recommended a more generous state pension system to prevent an increase in means-testing. The government is currently considering its response.
The Age Concern report concludes that many older people feel their pensions do not adequately reflect contributions made during their working lives. It will shortly be clear if ministers agree.
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