Executive Summary
Progress since 1997
Tackling pensioner poverty – our first priority
1. Government has a responsibility to protect its citizens against poverty and insecurity in retirement. The actions we have taken since 1997 – establishing Pension Credit, Winter Fuel Payments and real terms increases in the value of the basic State Pension – have helped pensioners escape from poverty.
2. This Government introduced the Minimum Income Guarantee for pensioners, now part of the Pension Credit, which has raised the minimum income pensioners are entitled to from £68.80 a week in 1997 to over £114 today. More than 2 million pensioners have been lifted out of absolute poverty, and 1 million out of relative poverty. And we have seen sustained increases in pensioner incomes, with the poorest benefiting most. Pensioners are now less likely to be poor than younger people. In addition, the savings reward in Pension Credit has tackled the penalty of the 100 per cent marginal deduction rate that many savers faced, for the first time rewarding 1.9 million pensioner households who saved for retirement.
3. The years of economic instability and high unemployment in the 1980s and early 1990s were damaging to pensions and pensioners. High inflation eroded the value of savings. Unemployment, which hit 3 million twice, denied millions the opportunity to build additional pension entitlements. Uneven and unsustainable growth made it harder to plan for the future with confidence. Thanks to the Government’s commitment to maintain economic stability, invest in Jobcentre Plus and the New Deal, and make work pay, Britain now has the highest employment rate of any of the G8 countries. Some 2.3 million more people are now in work compared to 1997.
4. These policies have brought significant benefits for pensioners. The high rate of employment has given more people the opportunity to save for their retirement, and has helped contribute to stable growth in the economy. The Government is committed to maintaining this macroeconomic stability.
Figure 1: Percentage of pensioners in relative and absolute low income
Source: Households Below Average Income
Note:Relative low income gives the numbers below 60 per cent of contempory median net income.
Absolute low income gives the number below 60 per cent of 1996/97 median net income held in constant real terms.
In each case income is measured after housing costs.