Warning as 160,000 pensioners caught in poverty trap

ACCORDING to figures released this week, 160,000 pensioners in Scotland are living in relative poverty – with an income of less than 60 per cent of the national average.

The Scottish Government says the numbers of pensioners living in relative poverty has actually fallen – from 17 to 16 per cent over the last year.

However, campaigners for the rights of older people say the statistics mask a different story, in which the rising price of daily essentials such as food, petrol and fuel is having a devastating effect on their quality of life.

Ros Altmann, director-general of over-fifties experts SAGA, says: “The kind of inflation we have been experiencing has hit pensioners harder than other groups because of the things they spend their money on. They spend more of their money on food and fuel. The kind of things older people spend their money on have gone up the most.”

According to figures produced by the Office of National Statistics, which compiles a pensioner inflation index, prices for pensioners have risen 20 per cent since the beginning of the financial crisis. By contrast, inflation for UK households as a whole prices have risen 16 per cent.

An older person living alone is said to have experienced a 26.5 per cent increase in the cost of the things they buy since 2007 when the current financial crisis began.

Altmann says the figures showing the number of people living in relative poverty do not tell the whole story. “What the figures do not say is how much people can afford to buy with their income. Also, if average income falls, then relative income also falls because one is calculated on the basis of the other.”

The recent rises in fuel costs have had a disproportionate effect on older people – an issue which also causes concern. Almost two thirds of single pensioner households in Scotland are said to be experiencing fuel poverty.

Ann Robinson, director of consumer policy at uSwitch.com, says: “The economic situation of the last few years has been tough, but it’s also fair to say that it has been tougher for some groups of consumers than others.

“Rocketing living costs are a burden for most households, but can be particularly challenging for those living off a fixed income such as a pension.

“Higher energy prices are a particular concern because they can lead to people rationing their energy use and going without heating, both of which can severely affect quality of life and even have an impact on health and wellbeing.

“The cost of household energy has rocketed by 140 per cent to £1,252 a year since 2004. At the same time, the minimum state pension for a couple has gone up by 35 per cent to £11,175 a year – energy costs now eat up a tenth (11 per cent) of this. And with low interest rates on savings and low returns on pensions, retired people in particular do not have much to fall back on to help them.”

The government has announced plans for a White Paper on pensions which is expected to introduce a flat rate of £140 a week to anyone with a full 30- year national insurance record. By the time the new basic pension is expected to be introduced in 2016, the rate is expected to be £160 a week.

However, today’s pensioners are experiencing real hardship, with nearly half living on an income below £10,000 a year. Those with private pensions have experienced a worrying drop in the value of their pension because of low interest rates, which are being held down by the Bank of England’s policy of quantitive easing.

Age Concern Scotland said: “For older people who are living on a low, fixed income, life can be tough, with basic living costs such as food and energy still high and April’s pension increase barely keeping up with inflation. Fuel poverty remains Scotland’s national disgrace, with almost two thirds of single pensioner households ‘fuel poor.’

“Age Scotland welcomes the Scottish Government’s recent commitments around fuel poverty, which it must now ensure are put into action, and funding agreed with Cosla to ensure council tax support for older people in Scotland is protected will help. At UK level, plans to introduce a flat rate pension of £140 a week will help future pensioners, but more needs to be done for the current generation of pensioners. ”

In Altmann’s view, the main priority should be to acknowledge the difficulties pensioners are experiencing at present: “It almost seems as though policy is designed to take money from older people and give money to younger people.

“The government needs to acknowledge the difficulties that exist today and to try to ensure that today’s older people have a better quality of life.”