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Pensioner Poverty

Volume 458: debated on Thursday 29 March 2007

To ask the Secretary of State for Work and Pensions if he will estimate (a) how many pensioners were living in deep poverty, defined as a household income below 40 per cent. of median household earnings and (b) how many such pensioners were not claiming the full pension credit or minimum income guarantee they were entitled to in each year since 1997-98. (113565)

The most common and internationally recognised threshold to measure poverty is income below 60 per cent. of median. We do not present information covering 40 per cent. of median income in our Households Below Average Income series as it is not a good measure of poverty. This is because households stating the lowest incomes to the Family Resources Survey (FRS) may not actually have the lowest living standards. Many people who report very low incomes appear to have high spending. Hence any statistics on numbers in this group may be misleading.

Specific information regarding low income for the United Kingdom is available in ‘Households Below Average Income 1994-95 to 2005-06’ (HBAI). This annual report, which is a National Statistics publication, includes the numbers and proportions of individuals, children, working age adults and pensioners with incomes below 50 per cent., 60 per cent. and 70 per cent. of median income, and the proportions in persistent poverty.

Pension credit has been highly successful in reducing pensioner poverty; since its introduction, the number of pensioners in relative poverty has fallen by over 700,000. Now, for the first time in a period of sustained economic growth, pensioners are less likely to be in poverty than the population as a whole, after housing costs are accounted for.

We continue to make every effort to ensure that pension credit goes to those who are entitled to it. It is more challenging to reach those entitled to smaller amounts, or to the savings credit only, who may be less familiar with the entitlements available to them. The Pension Service has contacted pensioners to encourage them to take up entitlement to pension credit many times already as part of extensive marketing activity. Over 70 per cent. of those pensioners who appear to have entitlement to pension credit have been contacted over five times already. And around 25 per cent. of customers visited about pension credit say that they do not want to make a claim. However, we are committed to improving take-up and are continually looking at further ways to target these groups and encouraging them to apply.

The information requested for pensioners in Great Britain is shown in the following tables. Estimates of entitled non-recipients of MIG or pension credit should be treated with caution. This is especially the case given that we are looking at the extreme of the income distribution and so are less sure of pensioners’ modelled entitlement. Results are based on small sample sizes and have not been corrected for biases that may be inherent in estimates of entitlement to income related benefits—that is, they may be based on the data for those who appear to be entitled non-recipients but will not all actually be entitled non recipients and vice versa. Figures are therefore presented as proportions of the total pensioner population below the 40 per cent. of median household income.

Table 1 : Number of pensioners living in households with less than 40 per cent of contemporary median household income, and as a proportion of all pensioners, for the years 1997-98 to 2005-06, Great BritainAfter housing costs (Million)As a proportion of all pensioners (Percentage)1997-980.4751998-990.4951999-20000.4952000-010.4652001-020.5152002-030.4752003-040.5152004-050.4542005-060.464 Notes:1. Figures are presented after housing costs as this is our preferred measure for pensioners.2. The table shows number of individuals in millions, rounded to the nearest 10 thousand.3. These figures are not National Statistics and caution must be applied because those people stating the lowest incomes in the FRS may not actually have the lowest living standards.4. Estimates cover the private household population of Great Britain. The data source is the Family Resources Survey.5. These figures are calculated using OECD equivalisation factors. Prior to 2002-03 they are based on a GB median and from 2002-03 it is based on a UK median. This is consistent with low income estimates published in the latest edition of Households Below Average Income. The GB median is similar to the UK median.

Table 2: Proportion of pensioners living in households with income below 40 per cent. of contemporary median household income who were also living in a benefit unit that is entitled but not receiving IS-MIG-PC, Great Britain

Percentage

After housing costs

As a proportion of all pensioners

1997-98

36

2

1998-99

35

2

1999-2000

42

2

2000-01

45

2

2001-02

57

3

2002-03

55

3

2003-04

50

2

2004-05

64

3

2005-06

59

3

Notes:

1. Figures are presented after housing costs as this is our preferred measure for pensioners.

2. Estimates of the pensioner population cover those above state pension age (60 for women and 65 for men). The estimates therefore exclude some men aged 60 to 64 and partners of pensioners aged under 60, who may have been eligible but not claiming pension credit.

3. Estimates also exclude those cases where respondents have reported they are awaiting the outcome of a claim for a benefit and have been modelled as entitled to that benefit.

4. Estimates cover the private household population of Great Britain. The data source is the Family Resources Survey.

5. These figures are calculated using OECD equivalisation factors. Prior to 2002-03 they are based on a GB median and from 2002-03 it is based on a UK median. This is consistent with low income estimates published in the latest edition of Households Below Average Income. The GB median is similar to the UK median.

6. minimum income guarantee (MIG) was introduced for pensioners in April 1999 paid through income support.

7. Pension credit (PC) was introduced mid-way through 2003-04; therefore, estimates for 2003-04 cover those pensioners who were entitled but not receiving either MIG or PC. As this relates to the first six months of pension credit the figures should be treated with some caution.

8. For the purposes of this analysis, benefit unit based data (take-up statistics) were combined with household equivalised income based results (Households Below Average Income statistics).

9. Estimates for 2000-2001 and 2003-2004 onwards incorporate the results of a data matching exercise, which links the Family Resources Survey with DWP administrative data in order to identify ‘hidden recipients’ of MIG-PC, i.e. those people who tell the FRS they do not receive pension credit, but actually do.

10. Estimates are presented as proportions of the total pensioner population below the 40 per cent. of median household income, as the analysis is based on single-year survey data and the absolute numbers of such pensioners who were not claiming the pension credit or minimum income guarantee they were entitled to might be biased due to small sample sizes.

11. These analyses have not been corrected for the biases that may be inherent in estimates of entitlement to income-related benefits—that is, they may be based on the data for those who appear to be entitled non recipients (ENRs) but will not all actually be ENRs and vice versa—and so they should be treated with some caution.

12.The estimates relate only to those who were modelled as entitled to receive benefit but were not identified to be in receipt of any amount of benefit. It therefore does not include cases where a pensioner is in receipt of some benefit, but this is less than the amount they are truly entitled to. Including these cases may not give a reliable indication of full take-up due to the potential error that exists in modelling entitlement.