There has been a sharp increase in poverty amongst pensioners in the last decade, with a particularly rapid rise for retirees who are divorced or who never married, according to a report from consultancy Lane Clark & Peacock.
Additionally, two thirds of single pensioners in poverty in the UK are women, and the LCP report advocates a range of policies for the Government’s Pensions Commission to consider to address such issues.
According to the report, the total number of single pensioners in England and Wales who are divorced has trebled since 2002 – an increase of over 1 million to 1.5 million in 2024. The number who are ‘single, never married’ has started to rise, now standing at 800,000, reflecting growing numbers who previously cohabited outside marriage.
Pensioner poverty reached its lowest point in 2013/14 but has been rising steadily since then. Figures previously published by the Department for Work and Pensions has shown that overall pensioner poverty rose from 15.7 per cent in 2012/13 to 18.6 per cent in 2023/24.
Pensioners cohabiting as a couple have always had lower poverty rates than singles, but the gap has grown rapidly in the last ten years. As the chart shows, the rise in pensioner poverty since 2012/13 has been driven almost entirely by single pensioners.
Steve Webb, former pensions minister and a partner at LCP, says: “Some of the discussion of the position of pensioners seems to imply that pensioner poverty is largely solved.
“But, since 2012/13, pensioner poverty has been rising steadily, predominantly amongst single pensioners. Issues such as inadequate pension sharing at the end of a relationship and the continuing gender pension gap mean that women in particular are at higher risk of poverty in old age.”
The report also recommended making it easier for the higher earner in a couple to pay into the pension of their lower earning spouse or partner. This is currently possible but only attracts basic rate tax relief, even if the higher earner pays higher rate tax.
Looking at pension sharing when a longstanding cohabiting relationship breaks up, the report noted that at present there is no formal mechanism for pension sharing in this situation, leaving women in particular at risk of having very low independent incomes in retirement.
