Advisory firm HUB Financial Solutions found retired households with the lowest income received the lowest level of benefits, raising concerns that many cash-strapped pensioners may not be checking their entitlements to additional help because they own their home.
This research, based on ONS figures show that among retirement household, the bottom quintile, in terms of income, received an average of £936 in additional state benefits, excluding the state pension.
In this cross section the average income was just £11,361 and 88 per cent of people owned their own property. The benefits they received were worth just 8 per cent of their gross annual income.
However, in the next income bracket — where average incomes were £17,118 — the value of average annual state benefits was £2,625. This accounts for around 15 per cent of average income. In this group just 66 per cent of people were homeowners.
The average annual state benefits were similar in the next two income brackets. For those in the third quintile, where the average income was £22,125, annual benefits were on average £2,715; and in the second quintile average incomes were £30,318 cash benefits were typically worth £2,608.
Property ownership was 70 per cent, and 80 per cent in each of these groups respectively.
The state pension was excluded from all these benefits, though will be a part of overall income.
HUB Financial Solution managing director Simon Gray says: “The common assumption that those with the lowest incomes get the most support is reversed in retirement.
“These figures prove that retired households with the lowest incomes receive the least State help.
“What stands out is the high home ownership rate of 88 per cent among households with the lowest incomes. That is almost as high as the 90 per cent ownership rate of those with the highest incomes, and far higher than all the middle-income groups.”
Gray says these figures suggest that during their working lives, many of those who find themselves with the lowest incomes in retirement saved for homes rather than pensions and now find themselves ‘property rich, cash poor’.
“Benefits research has found that more than four in 10 pensioners were eligible to claim one of the key benefits such as pension credit or council tax reduction. Of those, nearly half (49 per cent) were failing to claim any benefit and one in five (20 per cent) were not claiming the full amount,” he adds.
“The average value of missing benefits was £1,058 a year but there were cases where benefits of more than £5,000 a year were not being claimed. These are meaningful sums of money that could make a real difference to people’s lives.”