Pensioner poverty levels unacceptable, say MPs

30 July 2009

A Work and Pensions Committee report states the level of pensioner poverty has declined markedly since 1997. However, there are still 2 million pensioners in poverty and 1.1 million who live below 50 per cent of median income, figures the Committee considers to be unacceptable.

The report looks at what more the Government could do to lift pensioners out of poverty.

The Committee welcomes assurances that the Government has the same commitment to tackling pensioner poverty as it does to tackling child poverty. However it believes that this should be made more explicit and calls on the Government to commit to eradicating pensioner poverty.

Pension Credit has lifted large numbers of pensioners out of poverty. Take-up improved rapidly after its introduction, but has since plateaued. Despite the best efforts of the Pension, Disability and Carers Service (PDCS), it is now seeing diminishing returns for its efforts. The report recommends that the Department for Work and Pensions (DWP) should look to working more with third sector organisations and trialling more innovative techniques to ensure that it is reaching as many vulnerable pensioners as possible.

Local authorities and the Department also need to do more to increase take-up of Housing and Council Tax Benefit. This will lift people out of poverty in itself, and bring people into contact with the benefits system, making it more likely that they will claim Pension Credit. The Committee concludes that there should be a single phone line for all three benefits to allow people to claim all the benefits they are entitled to in just one call.

The Committee believe that pensioners in residential care whose weekly spending is restricted to the Personal Expenses Allowance (PEA) should be able to live in dignity. Even though their accommodation and food is provided for them, they should still be entitled to a decent allowance to allow them to live fulfilled lives, and to keep up contact with their families. The current level of PEA does not allow this. The Committee therefore calls on the Department of Health to raise the PEA from £21.90 to £40.

The Committee also looked at the differences between Attendance Allowance and Disability Living Allowance. The Committee does not accept the Government’s justifications for these differences and is concerned that the differences of treatment on the grounds of age contravene the clear intentions of the Equality Bill.

The Committee looked at financial advice for pensioners and for those planning for their retirement. Money Guidance and the proposed “one stop shop” (as proposed in the Building a Society for All Ages strategy) has to become the clear, trusted, source of financial advice which is clearly needed. The Government must focus on both the importance of branding, and the importance of ensuring the service reaches out to those who may not be aware that they need advice.

The Committee say that while no pensioner should be expected to work after 65, many would like to. The Committee call for the Default Retirement Age to be abolished and for protection from discrimination for older workers to be strengthened, to ensure that every pensioner who wishes to can continue working.

Past recessions have led to disproportionate numbers of older workers over 50 losing their jobs and never working again. The Department must not allow this to happen again.

The Chairman of the Committee, Terry Rooney MP, said:

“The Government has done a lot to help pensioners, but there is a lot still to do. The Government has committed to eradicating child poverty, now they need to commit to eradicating pensioner poverty.

"Many Government strategies have worked well in the past but are now showing diminishing returns. The Government needs to develop new and innovative programmes to lift pensioners out of poverty. Take-up of Pension Credit has plateaued while take-up of Housing and Council Tax Benefit is falling.

"The Government needs to work closely with the third sector, with charities who are trusted by pensioners and can persuade them to claim the benefits they are entitled to. PDCS also needs to work more closely with local councils to ensure those claiming Housing or Council Tax benefit are also claiming Pension Credit.

"Pensioners and people planning for their retirement need far more advice. Everything from how much they need to save, life styling, annuities, and how to change their electricity supplier. The Government’s new “one-stop shop” could do this, if it is done well. It needs a strong brand people trust, and it needs to be easy for people to use.

"The Government has brought forward the review of the Default Retirement Age. The Default Retirement Age is discriminatory, is bad for society, bad for older people, and bad for the economy. It has to go.”

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