Pensioner poverty rates unlikely to decline

19 Jul 07
Pensioner poverty rates are unlikely to decline, despite government plans to invest billions in re-linking state payments to earnings, financial experts warned this week.

20 July 2007

Pensioner poverty rates are unlikely to decline, despite government plans to invest billions in re-linking state payments to earnings, financial experts warned this week.

The Institute for Fiscal Studies said that recent declines in pensioner poverty rates 'are unlikely to continue after 2007/08, even after the implementation of the proposals outlined in the government's white paper' published earlier this year.

Around 2.2 million UK pensioners live in poverty, with half living in 'deep poverty'. Experts have welcomed the Department for Work and Pension's plan to re-link the basic state pension (BSP) to earnings from 2012, its key white paper proposal.

But an independent IFS study, commissioned by Help the Aged and published on July 18, shows that over-65s will still encounter poverty rates of around 20% over the next decade – partially because of reductions to some means-tested pension credits.

IFS co-author James Browne said the poverty rate would remain 'more or less stable', despite BSP indexation, and despite the fact that people about to reach retirement age are expected to have more private pension income, and higher rates of employment at older ages, than previous generations of over-65s.

'Over the next decade, pensioners' living standards should continue to increase, but not sufficiently fast for the population of pensioners in relative poverty to fall,' Browne warned.

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