Credit, Collections & Insolvency News
Over half (54%) of pensioners on a low income find it a struggle to keep up with bills and credit commitments, causing misery and worry to hundreds of thousands of retirees. The findings are revealed in new research by the Living Wage Foundation based on polling of pensioners who are on a low income.
The polling found that many have no financial buffer with one in three (35%) rely on money from other sources such as benefits, or money from friends, family or a partner. Nearly one in three (30%) are in some level of debt.
A further one in five (21%) use their hard-earned savings to cover everyday expenses. Whilst one in five (20%) say they couldn’t afford an unexpected but necessary expense of £200, making them vulnerable to even more hardship if, for instance, their washing machine or boiler broke down and needed replacing or repairing.
For some, life has become unmanageable. One in seven (14%) reported falling behind with bills or rent, taking out payday loans to cover essential costs, being unable to heat their homes or regularly skipping meals in the past year.
The financial strain is taking a toll on wellbeing, with 26% saying their income makes them more anxious and 25% reporting it has worsened their sleep.
Pensioners who rent or who live alone are significantly more likely to be in debt, fall behind on bills or struggle with unexpected costs wih one in four (24%) renters had fallen behind with bills or rent, been unable to afford heating or regular meals, or taken out a pay-day loan to cover essentials. 43% of renters were in some level of debt compared to 23% of homeowners. 40% of people living alone were in debt compared to 25% of people living with a partner. Whilst 34% of people living alone said they couldn’t afford an unexpected but necessary expense of £200 compared to 14% of people living with a partner. 31% of renters compared to 15% of homeowners said they wouldn’t be able to meet a £200 unexpected cost.
Most pensioners on a low income are reliant on the State Pension as their main source of income with more than half (54%) having no workplace pension to draw on. Pensioners with a workplace pension, even if on a low income, are less likely to be struggling. Over half (56%) of those who aren’t struggling to keep up with bills and credit commitments have a workplace pension, compared to just over a third (37%) of those who are struggling, highlighting the need for stronger employer contributions.
Katherine Chapman, Director of the Living Wage Foundation, said “These findings show the tough reality for too many pensioners who, after a lifetime of work, are still left without enough to live on. No one should be worrying about putting the heating on when it’s cold or boiling the kettle for a cup of tea. The good news is, there’s a simple way that employers can play their part in tackling pensioner poverty. Our Living Pension standard sets out the contribution level needed for a decent standard of living in retirement and it’s been brilliant to see more and more employers signing up so that their employees can look forward to a retirement with dignity and security.”
Samantha Brown, UK & EMEA managing partner, employment pensions & incentives at Living Pension Employer Herbert Smith Freehills Kramer, said “As the UK population grows older are we about to see the ‘bank of Mum and Dad’ replaced by ‘Savings of Siblings’ with many pensioners reliant on their family for financial support?
“The reality is that a significant portion of the population is not on track to fund a secure retirement. Little wonder that trustees and pension funds are increasingly concerned about the long-term implications of this trend. Tackling the retirement savings gap will require a multi-pronged approach: expanding access to workplace savings schemes, improving financial literacy, and encouraging consistent long-term contributions. The key to this lies in exploring innovative strategies and advocating for policy reforms that help build more resilient retirement outcomes for future generations.”