Low income dynamics amongst pensioner households in the UK

Background

A recent forecast by the OECD estimated the average British female (male) at state pension age in 2010 should expect to live for an additional 24.5 (16.9) years, up from 22.7 (15.4) in 1999 (OECD, 2011). This is good news, assuming individuals can afford to live for longer; however a recent report by the Department for Work and Pensions (2014) estimates 1.8 million pensioners are living in poverty (DWP, 2014).

  • Expenditure on state pensions is non-trivial: In 2011-2012, £74.22 billion pounds or 47% of the UK benefit spending was put aside for state pension payments (Guardian, 2013).
  • In the tax year 2013-2014, £6.233 billion pounds was spent on Guarantee Credit; a specific benefit available to pensioners on low incomes (DWP, 2015a)

These statistics highlight the significant fiscal implications of an ageing population in the UK; and the particular need to understand low income dynamics in order to reduce current poverty and its implications for future pensioner poverty.

Project aims

  • Establish the characteristics which are associated with (1) poverty entry, (2) survey retention and (3) conditional poverty status.
  • Understand whether (1), (2) and (3) are correlated and what this means for estimating low income dynamics for pensioner households
  • Highlight the effect particular characteristics have on various poverty statistics such as: time spent in poverty, time spent out of poverty, poverty persistence rate and poverty entry rate.
  • Analyse the policy implications of the findings for current and future pensioners.

Methods

The project will analyse data from Waves 2-4 of Understanding Society.

Team members

Dr. Ricky Kanabar, Senior Research Officer, ISER, University of Essex

Ricky’s main research interests relate to the Economics of Ageing. His past research has focussed on the determinants of labour supply at older ages.

Funder

ESRC

Timeframe

Summer 2014 – Summer 2015