United Kingdom
Older people with no private income
Key points
- 1.2 million pensioners have no income other than the state retirement pension and other state benefits. This is around 20% of single pensioners and 7% of pensioner couples. It is a slightly lower number than a decade ago.
- Single pensioners constitute two thirds of the pensioners who solely rely on the state.
- More than half of employees on below-average incomes are not contributing to a non-state pension (although some may belong to a non-contributory pension scheme).
- The proportion of employees not contributing to a non-state pension is around a third for all ages from 30 to 60. Most employees aged 24 or less are not contributing to a non-state pension.
Graph 1: Over time
View Graph as PDF (resizeable) Right click to save large version of Graph as PNG
Graph 2: Not contributing by income
View Graph as PDF (resizeable) Right click to save large version of Graph as PNG
Graph 3: Not contributing by age
View Graph as PDF (resizeable) Right click to save large version of Graph as PNG
Why this indicator was originally chosen
Although pensioners on average enjoy better incomes than they have in the past, this rising average conceals a large minority who have no additional resources other than the state retirement pension and means tested benefits. This indicator looks at the number of pensioners in this situation. Pensioners receiving the state earnings related pensions are not included in this group. Note that, although pensioners relying solely on state benefits are obviously the worst off in their age group, many of those with investment income or second pensions have little extra from these sources.
Younger pensioners entering retirement generally have more money than older pensioners. There are a number of reasons for this. One reason for this is that women far outnumber men after seventy five years old and older women tend to have lower incomes than men because of their less continuous employment histories. Also, income received on retirement often reduces in real terms as many private pensions are not fully index linked.
The second graph for this indicator looks at the proportion of people of working age who are not contributing to a second pension, thus giving some indication about the likely extent to which future pensioners will be solely reliant on the state. Johnson P, Sharing in the Prosperity of the Nation, Age Concern, 1996.
Definitions and data sources
The first graph shows the number of pensioners with no income other than the state retirement pension and state benefits. Note that the figures exclude all those with any other income even if very small.
The data source for the first graph is Households Below Average Income, based on the Family Resources Survey (FRS). The data relates to Great Britain (Northern Ireland has been excluded from the figures from 2002/03 onwards as, before this date, FRS only covered Great Britain).
The second and third graphs both show, for the latest year, the proportion of currently employed working-age adults not contributing to a non-state pension. In the second graph, the data is shown separately for each income quintile. In the third graph, the data is shown separately by age group.
Note that 'not contributing to a pension' is not the same as 'not having a pension' because a) some people will belong to a non-contributory pension scheme and b) some people will have a pension which they happen not to have contributed to over the latest year.
The data source for the second and third graphs is FRS. The data relates to the United Kingdom. The income quintiles are defined in terms of disposable household income after deducting housing costs with all data equivalised (adjusted) to account for differences in household size and composition.
Overall adequacy of the indicator: high. The FRS is a well-established annual government survey designed to be representative of the population as a whole. However, since it only covers people living in private households, and not residential institutions (such as nursing homes), it does leave out a significant group of older people.
External links
See the DWP sites on Pension Credit and Winter Fuel Payments.
Relevant 2007 Public Service Agreements
None directly relevant.
Relevant government policies
The numbers
Graph 1
| The number of pensioners with no income other than state benefits (millions) | ||
|---|---|---|
| Year | Pensioners in couple households | Single pensioners |
| 1994/95 | 0.4 | 0.9 |
| 1995/96 | 0.4 | 1.0 |
| 1996/97 | 0.4 | 0.9 |
| 1997/98 | 0.4 | 1.0 |
| 1998/99 | 0.4 | 1.0 |
| 1999/00 | 0.4 | 0.9 |
| 2000/01 | 0.4 | 0.9 |
| 2001/02 | 0.5 | 0.9 |
| 2002/03 | 0.4 | 0.8 |
| 2003/04 | 0.4 | 0.8 |
| 2004/05 | 0.4 | 0.8 |
| 2005/06 | 0.4 | 0.8 |
Graph 2
| Poorest fifth | 70% |
|---|---|
| 2nd | 60% |
| 3rd | 52% |
| 4th | 42% |
| Richest fifth | 31% |
Graph 3
| Age Group | % |
|---|---|
| 16 to 19 | 94% |
| 20 to 24 | 78% |
| 25 to 29 | 56% |
| 30 to 34 | 42% |
| 35 to 39 | 36% |
| 40 to 44 | 36% |
| 45 to 49 | 35% |
| 50 to 54 | 32% |
| 55 to 59 | 36% |
| 60 to 64 | 50% |