MORE than one million single pensioners across the UK are now entirely dependent on the state pension for their income, new analysis shows.
The 1.1m figure represents roughly a quarter of single pensioners. It is an increase of 26 per cent over the five years to 2016; in the 12 months to April 2016 the numbers jumped up by 15 per cent.
In 2011, the number of single pensioners entirely reliant on the state pension for their income was 850,000. The 1.1m figure for 2016 represents the highest level for more than 20 years.
Official Department for Work and Pensions figures also show some 330,000 pensioner couples are also wholly reliant on the state pension, income-related benefits and disability benefits for their income, according to analysis carried out by Just, the specialist retirement services group.
“With increasing numbers entirely dependent on the state in retirement we need to encourage people to save and plan for their retirements,” said Stephen Lowe, the group’s communications director.
“The state will never provide a retirement income that allows for many comforts, so for those who do have some savings, good guidance about what to do with those savings is vital. Poor decisions can quickly erode savings and despite their best endeavours people will find themselves reliant on whatever the state can provide.”
He pointed out how Pension Wise, the UK Government’s impartial and free-to-use guidance service, was there to help people make good decisions about how to use their pension savings.
“But far too few people are making use of this service and it’s high time the Government made Pension Wise the default option for people accessing their pension benefits for the first time,” he added.
The DWP figures for 2015/16 show the average amount of weekly state income - including income-related benefits - for single pensioners was £188. This means the taxpayer bill for all 4.5m single pensioners at more than £850m per week.
Overall, the numbers show that in 2015/16 there were 8.7m pensioner “units”; 4.5m single pensioners and 4.2m pensioner couples. Of the single pensioners, 3.2m were women and 1.3m were men.
For the same year, the median weekly income, after housing costs were taken into account, for single pensioners was: £210 in Scotland; £191 in north east England; £192 in Wales; £200 in Yorkshire and £215 in south east England. Across the UK, the figure was £203.
The equivalent numbers for married pensioners were: £438 in Scotland; £414 in north east England; £388 in Wales; £408 in Yorkshire and £497 in south east England. Across the UK, the figure was £436.
Meantime, research from more 2 life, the equity release lender, showed that the size of the “retirement lending market” in the UK is set to rise from £65bn in 2017 to more than £142bn in 2027; an increase of over 120%.
This comes as people are buying properties later in life, carrying the debt into retirement as those aged over 65 continue to work.
The research predicts that the average total debt of every 65 to 74-year-old in the UK will rise by £10,000 between 2017 and 2027, from £12,500 at present to £22,700 in 10 years’ time.
The retirement lending market includes all types of secured and unsecured debt such as mortgages, credit cards, overdrafts, loans, car finance, hire purchase, student loans, payday loans and store cards.
“Lending into retirement is becoming the new normal in the UK market and demand among older borrowers is going to increase significantly over the next decade,” said Dave Harris, Managing Director at more 2 life.
“The demographics driving this demand are clear; we’re living longer, we’re buying houses later, more and more older people are working past the age of 65 and pensions freedoms have enabled people to access and, in some cases, already spend their retirement funds.
“All of these factors means that borrowing in retirement is going to become a much more prevalent feature of the UK financial services market,” he added.
Over the weekend, analysis from Edinburgh-based insurance firm Aegon suggested women faced working well past retirement age or becoming increasingly dependent on their partner’s finances as it showed men had three times more in pensions savings; a difference of nearly £50,000.
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