Future generations of pensioners face a bleak future unless Government addresses the long term challenges of working age poverty, argues the International Longevity Centre – UK (ILC-UK).
In 2012/13, pensioner households were less likely to be on a low income than households with working age adults or households with children. This marks a stark contrast to 15 years ago when low incomes were far more prevalent across pension households than working age ones.
The figures are set out today by ILC-UK as it launches its second annual Factpack on ageing and demographic change (Mapping Demographic Change). The Factpack has been developed as part of the #populationpatterns series supported by the specialist insurer Partnership. ILC-UK highlight that whilst pensioner poverty has fallen substantially, the future may not be so rosy:
- Whilst 1.6 million pensioners are experiencing relatively low incomes, pensioner poverty has fallen drastically over the last 15 years. In contrast, the proportion of households with working age adults and households with children living on low incomes has remained relatively stagnant. Relative poverty among working age adults without children has increased.
- The number saving into a pension has dwindled over the past decade from over 5.5 million in 2000 to 2.5 million in 2012.
- For the first time in two decades, a higher proportion of 18-24 year olds are economically inactive than 50-64 year olds.
- The average age of a first time buyer without family assistance is now 33 compared with 30 in 2008. The number of households renting privately has increased by 63% since 2001.
Last week, the Office for Budget Responsibility (Fiscal Sustainability Report) predicted that by 2063, age related spending will equal 25.1% of GDP compared to 20.4% in 2018.
Speaking at the launch of the Factpack, Ben Franklin of ILC-UK said:
“We have made fantastic strides with tackling pensioner poverty over the last 15 years. But future generations may not be so fortunate. A combination of high house prices, low levels of saving and working age poverty presents significant challenges for tomorrow’s pensioners. These are long term problems which require action now. Last week’s Fiscal Sustainability Report highlighted the future potential cost of ageing. Taking action now to reduce working age poverty could contribute to long term savings by future Governments”.
Richard Willets, Director of Longevity at Partnership added:
“Alleviating pensioner poverty is something that we all agree should be a priority. However, rather than simply concentrating on those who are in retirement at the moment, we also need to think about the longer-term future. Those who are experiencing working age poverty at the minute are less likely to be in a position to save, buy their first home and start a pension– all steps which can put them on the road to a more comfortable retirement. Even with positive moves such as auto-enrolment, we seriously need to consider how we can do more to solve this problem and avoid storing up issues for the future.”
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