United Kingdom

Older people with no private income

Graphs on this page:

Supporting information:

Key points

  • 1.2 million pensioners have no income other than the state retirement pension and other state benefits.  This is around 18% of single pensioners and 6% of pensioner couples.  It is a similar number to a decade ago.
  • Single pensioners constitute around two-thirds of the pensioners who solely rely on the state.
  • The proportion of workers without a current pension increases as household income decreases (a ‘pension’ here meaning that either they are a member of a pension scheme run by their employer or they have a pension that they arranged for themselves). Two-thirds of those in the poorest fifth do not have a current pension.
  • For all ages from 40 to 60, around a third of workers do not have a current pension.  Most workers aged 24 or less do not have a pension.

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. 1

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. 2

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 the proportion of currently working working-age adults (both employed and self-employed) who do not have a current pension.  In the second graph, the data is shown separately for each household income quintile.  In the third graph, the data is shown separately by age group.

A person is deemed to have a current pension if they answered ‘yes’ to either “are you a member of a pension scheme run by your employer?” or “do you have a pension that you have arranged for yourself?” Note that ‘not having a current pension” is not quite the same as ‘not having a pension’ because some people will have a pension from a previous job.

The data source for the second and third graphs is FRS and the self-employed are included in the statistics.  The data relates to the United Kingdom and is the average for the latest three years.  The household 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

Relevant 2007 Public Service Agreements

None directly relevant.

The numbers

Graph 1

Year The number of pensioners with no income other than state benefits (millions)
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
2005/060.4 0.8
2006/070.4 0.9
2007/080.5 0.9
2008/090.4 0.8

Graph 2

Poorest fifth 69%
2nd 61%
3rd 53%
4th 44%
Richest fifth 32%

Graph 3

Age Group %
16 to 19 94%
20 to 24 80%
25 to 29 59%
30 to 34 47%
35 to 39 41%
40 to 44 37%
45 to 49 35%
50 to 54 34%
55 to 59 37%
60 to 64 42%
1. 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.
2. Johnson P, Sharing in the prosperity of the nation, Age Concern, 1996.