150325 Pensioner poverty
  • Pensioner poverty: an all-time low… I knew there was a reason I wrote that To The Point post on poverty statistics on Tuesday. It’s so I could write this one without having to explain all the terms. The above graph shows relative poverty (after housing costs) among four demographic groups. You’ll notice that only one of the demographic groups has a line that’s really gone down over the past fifty years: pensioners. Their rate of poverty has declined from the highest of the four, at 37.6 per cent in 1961, to the lowest, at 13.2 per cent in 2012-13. In fact, it’s now at an all-time low.
  • …and low by other measures too. The main point of my post on Tuesday was that poverty cannot really be judged by one statistic alone. So it’s worth noting that pensioners have done well in other terms too. Absolute poverty among pensioners, whether before or after housing costs, is around 30 percentage points lower than it was twenty years ago. They are the group least likely to be behind on their household bills. But, still, my original point stands: there are a thousand ways of measuring deprivation, some of which will be far less favourable for pensioners; such as access to the Internet, or time spent with friends and family.
  • Why so? The Institute for Fiscal Studies actually looked into this in a report published in 2013. Their conclusion? That “increases in incomes from state pensions and benefits, an increase in private pension income and a reduction in relative housing costs underlie the broad-based reduction in pensioner poverty during recent decades.” As we know, and as I highlighted in another recent To The Point post, much of this has continued under the Coalition. The state is now spending about £500 a year more on the average pensioner than it did five years ago.
  • Political questions… The decline in pensioner poverty, even if just on income measures, is nothing to be lamented – and certainly not to be angry about. But the situation does raise questions for politicians. There are more and more pensioners about nowadays, yet there’s also less money. With other groups suffering by comparison, how long can legislators stick by the current balance of taxes and spending? The hope is surely that younger people can do what retirees can’t: work their way out of poverty. But, even with the increase in jobs, that time isn’t quite now. As the IFS puts it, “It is likely that future releases of … data will show increases in income poverty among children and working-age adults. This is because cuts to the working-age social security budget as part of the fiscal consolidation were accelerated from April 2013.”
  • …and lessons. If pensioners are becoming better off, why was David Cameron booed by a group of them this week? Simple. Politics is never just about the economy, stupid. Voters care about more than just their pocketbooks.