Financial Security | The State of Ageing 2025

What do the charts show?  

• When pensioners are divided into five groups according to their net household income after housing costs, we see that the amount of benefit income (including the state pension) received by single pensioners ranges from £182 per week, on average, for those in the lowest 20% of net income (quintile one) to £284 per week, on average, for those in the second highest 20% (quintile four).  
• Benefit income for pensioner couples in the lowest 20% is £289 per week, on average, rising to £352 per week, on average, for couples in the next lowest 20%. The fact that everyone is eligible for the state pension accounts for the lack of variability across the income distribution.
• Where things differ greatly is the extent to which pensioners’ overall income comes from benefits. For the most well-off pensioner couples (quintile five), benefit income is just 16% of their total income compared with 78% for the least well-off couples (quintile one). This percentage ranges from 29% to 86% for the most and least well-off single pensioners.

We also know that:

• One in eight (13%) people above state pension age (SPA) have no income apart from the state pension and benefits. Among single pensioners, the proportion is one in five (20%). 
• Although virtually everyone gets some state pension, not everyone is entitled to the full state pension (because it depends on National Insurance contributions) and there is great variability in the amount that people receive depending on whether they are receiving the old or new state pension.  Only half of people claiming the new state pension, which was introduced in April 2016, are receiving the full amount, although we do not know if these people are in poverty as a result or if they have other sources of income.  
• Poverty levels are particularly high among people who are receiving the old state pension (they are the oldest people). About 285,000 (21%) people aged 85 and over are in poverty compared with 15% of people aged 70 to 74.
• Clearly, changes to the SPA have huge implications, especially for people who are unable to work right up to this age.  
• Reasons for not working up to the SPA include the advent of health conditions and caring responsibilities, which are more likely to affect the least well-off:
  • The healthy life expectancy for men and women in the most deprived areas of the country is just 52.3 and 51.9 years respectively (compared with 70.5 and 70.7 years in the least deprived areas). This means that men and women in the most deprived areas can expect to be in poor health 14 years before the SPA (currently 66 years).  
  • Healthy life expectancy has declined in recent years, a trend that, combined with an increasing SPA, will result in an even longer period of time when the poorest in society will have to try to work in poor health.  
  • A rising SPA will entrench health inequalities because it puts greater pressure on people to work for longer, particularly those from more deprived backgrounds who are more likely to have to work through periods of poor health due to lower levels of pension income and other savings.
  • At the same time, increasing the SPA will increase absolute poverty rates. Nearly 100,000 more people aged 65 were in absolute poverty following the rise in the SPA to 66 between December 2018 and October 2020. Plans to further increase the SPA will put more people at risk of poverty – it has been predicted that if planned rises to the SPA go ahead,  thousands of additional people will die each year before they can access the state pension. 
  • The provision of unpaid care also affects someone’s ability to stay in work. Carers UK report that, on average, 600 people a day (of all ages) leave work to care, and 75% of carers in employment worry about continuing to juggle work and care.
• There are also disparities in pensioners’ incomes by ethnic background:
  • The percentage of pensioners from a Black background who receive the state pension is ten percentage points lower than for pensioners from a White background (88% compared with 98%).
  • The percentage of pensioners who receive income-related benefits, such as Pension Credit or the winter fuel payment, is almost twice as high if they are from a Black background (37%) compared with people from a White background (20%).  
• A fifth of pensioner couples with the lowest 20% of net income receive income-related benefits (after housing costs) compared with 1% with the highest 20%. A third of single pensioners with the lowest 20% receive income-related benefits compared with a tenth with the highest 20%. 

What does the chart show?

• Although 1.32 million pensioners are currently receiving Pension Credit, it is estimated that 830,000 eligible people (140,000 single men, 410,000 single women and 280,000 couples) did not claim it in the financial year ending 2023. However, this could be as high as 970,000 people (living in 800,000 households).  
• Around three times as many single women as single men are not receiving Pension Credit to which they are entitled. This compounds the financial disadvantage that older women already face as a result of their fragmented work histories.  
• As more people move onto the new state pension, the numbers eligible for Pension Credit decline. However, the take-up rate of Pension Credit has remained constant at around 63%, rising to 65% in 2023.  

We also know that

• In 2023 £1.5 billion of available Pension Credit was unclaimed, down from the approximately £2 billion that was unclaimed in 2022. However, it has been estimated that £2.2 billion of Pension Credit will go unclaimed in 2024.  
• Claiming Pension Credit unlocks access to other channels of financial support, including warm homes discounts, broadband reductions, free TV licences, lower water bills, housing benefit, council tax support and, from this year, the winter fuel payment. It is estimated that the total support unlocked by Pension Credit (including Pension Credit itself) could be as high as £10,000 a year.  
• There are disparities in who is eligible for Pension Credit but not claiming it. There are almost one in five (19%) people from Black, Asian and Minority Ethnic backgrounds aged 50 and over who are eligible for Pension Credit but are not claiming it compared with just 7% of people in the same age group from a White background. This simply serves to exacerbate already gaping inequalities (see our technical report for more details).  
• There is a strong relationship between poverty and health, which means that lifting people out of poverty is key to improving the nation’s health. It is projected that the cost of social care would decrease by £4 billion a year by addressing Pension Credit take-up alone.  

What does the chart show?

• In 2024 a single pensioner could reach 94% of the MIS, whether they were receiving the full state pension or receiving a Pension Credit top-up.  
• Pensioner couples on the full state pension could reach 91% of the MIS while those receiving Pension Credit could reach 87%. This includes a small additional amount from the winter fuel payment.
• The figures for 2024 are an improvement on 2023 when single pensioners could only reach 80% of the MIS through the full state pension, with or without a Pension Credit top-up. In 2023 the percentage for pensioner couples on the full state pension was 81% while for those on Pension Credit it was 87%.  
• Although there has been an improvement – taken here as indicative of the success of the triple lock in protecting pensioners against the rising cost of living – the state pension topped up with Pension Credit still does not provide pensioners in this country with a basic standard of living. This means that the one in eight people above state pension age who have no other income are in a particularly risky position.  

We also know that:

• The MIS has increased year on year for all households as the cost of what is needed to reach a minimum socially acceptable standard of living has increased substantially. Between 2022 and 2023, the MIS increased by 12.7% for a single pensioner and by 12.3% for a pensioner couple.  
• The MIS fell slightly between 2023 and 2024 as a result of a reduction in the cost of domestic fuel, taxi journeys and social and cultural participation, even though the cost of rail travel to visit family and friends and of eating out and takeaways increased. During 2024, budgets for all households within the MIS were recalculated within the same year for the first time since 2008, resulting in a 3% reduction in the MIS for pensioner couples.
• Although the MIS for single pensioners and pensioner couples is £236 and £386 per week respectively, the net income needed to reach this amount is actually higher because of the interaction between the state pension and means-tested benefits. A single pensioner living alone needs an income of £17,200 a year to reach the MIS, an amount that is 50% higher than the value of the state pension. Pensioner couples need £27,800 (£13,900 each), which is 20% higher than the value of the state pension.  
• In 2020/21, 15.4% of pensioners were below the MIS benchmark but this percentage had increased to 20.5% in 2021/22 and again to 23.6% in 2022/23. In 2022/23, 34.5% of single pensioners (equivalent to 1.5 million people) and 17% of pensioner couples (1.3 million people) have an income below the MIS.  
• The UK has one of the worst mandatory (state) pension provisions across OECD nations, with an overall net replacement rate of 54.4% for an average earner compared with an OECD average of 61.4% (net replacement rate is defined as net pension entitlement divided by net pre-retirement earnings. It measures how effectively a pension system provides a retirement income to replace earnings).

What do the charts show?

• Automatic enrolment has increased participation in occupational pensions but the picture varies. When pensioners are divided into five groups according to their net household income after housing costs, we see that the amount of income from occupational pensions ranges from £15 per week, on average, for single pensioners in the lowest 20% of net income (quintile one) to £369 per week, on average, for those in the highest 20% of net income (quintile five).  
• Income from occupational pensions ranges from £37 per week, on average, for pensioner couples in the lowest 20% of net income to £748 per week, on average, for those in the highest 20%.  
• For the least well-off pensioner couples (quintile one) income from occupational pensions is just 10% of their total income compared with 39% for the most well-off couples (quintile five). This percentage ranges from 7% to 43% for the least and most well-off single pensioners.  

We also know that:

• In the lowest 20% of the net income distribution (quintile one), 43% of pensioners have no occupational or personal pension compared with just 8% of pensioners in the highest 20%.  
• In the highest 20% of the net income distribution (quintile five), 86% of pensioner couples and 80% of single pensioners receive income from occupational pensions compared with just 37% and 22%, respectively, in the lowest 20%.  
• The proportion of pensioners who receive income from occupational pensions is twice as high if they are from a White background (65%) compared with an Asian background (32%).
• Half of Disabled people have no private pension savings by the time they reach the age of 60 to 65.
• There are a number of reasons why people do not have any income or low income from occupational pensions:
  • Around 3.5 million (12%) employees do not qualify for automatic enrolment due to minimum thresholds for age and/or earnings. Among those who don’t qualify because their earnings are below the minimum threshold, 79% are women.
  • Less than 20% of 4.2 million self-employed workers save into a pension.
  • There are differences in participation and employer contribution rates by the size of the company. Eligible employees in small, private sector companies have persistently lower participation (81%) than employees in larger companies (91%). And in companies with fewer than 500 employees 69% of automatically enrolled employees receive an employer contribution of less than 4% while in companies with more than 500 employees 65% of automatically enrolled employees receive an employer contribution of more than 4%.
  • Poor health and caring responsibilities, which have the greatest impact on people from more deprived backgrounds, make it harder to work a full and uninterrupted career, affecting both state and occupational pension income. With healthy life expectancy falling, the prospect is even lower pension income in the future for people who need to adjust their working lives to accommodate their health or care for others, leading to growing wealth disparities. All of this is compounded by the ageism faced by older workers trying to get back into the workplace after they have fallen out of work for any reason.   

What does the chart show?

• Consistent with other regional inequalities, the percentage of pensioners with an occupational or personal pension varies by region, from 67% in London to 82% in the South West.  
• After London, the area with the next lowest provision of occupational or personal pensions is the North West (72%). This mirrors the regional pattern of material deprivation.  

We also know that:

• As people from minority ethnic backgrounds are known to be significantly underpensioned the fact that London has the lowest provision of occupational or personal pensions is unsurprising given that it has the highest number and percentage of pensioners from minority ethnic backgrounds.

What does the chart show?

• One in ten (9%) pensioners have no savings at all and more than a quarter (26%) have less than £1,500.  
• These proportions have fallen in the last ten years (in real terms, adjusted for inflation). In 2012/13 a quarter of pensioners had no savings at all and a third had less than £1,500.  

We also know that:

• Single female pensioners are the most likely to have no or low savings, with 13% having no savings and almost two in five (38%) having nothing or less than £1,500. This compares with 8% of pensioner couples who have no savings and 22% who have nothing or less than £1,500.  
• Almost a quarter (23%) of people aged 50 to 69 report that their household could not afford to pay an unexpected but necessary bill of £850; almost two in five (38%) do not think they will be able to save any money in the next 12 months; and a quarter (26%) are already dipping into their savings.
• Renting or paying a mortgage is a major factor in whether or not people can save enough across the life course to achieve financial security in later life. And renting or paying a mortgage in later life also affects later-life financial security. There are currently 472,000 private renters aged 55 to 64 and 444,000 aged 65 and over, along with 1.1 million people aged 55 to 64 and 356,000 aged 65 and older who have a mortgage. 
  • Of household heads who are private renters, 42% of those aged 65 to 74 and one in five (20%) aged 75 and over have no savings.
  • Of homeowners who have a mortgage, almost a quarter (24%) of those aged 65 to 74 and more than one in five (21%) aged 75 and over have no savings.
  • Private renters aged 65 and over spend more than a third of their income (including housing support) on rent (35% for people aged 65 to 74 and also for those aged 75 and over).
  • In England 15% of people aged 65 and over who rent privately have less than £100 per month left after paying their rent, while almost three in ten (29%) have £199 or less.
• Renters with the highest housing costs tend to be on the lowest salaries during their working lives, thwarting efforts to save for retirement. And while the state pension increased by 8.5% between 2022 and 2023, private rents increased by 15%.  
• The success of pension auto-enrolment has been held up as a model of how to use nudge strategies to increase the amount people save across their working lives. But it is not that simple because only 42% of future retirees feel they have the headroom to save anything for retirement.  
• The ability to save, whether in an occupational or personal pension or other savings, is contingent on being in work and earning enough. Falling out of work due to poor health, or for other reasons such as caring responsibilities, compromises someone’s ability to save. So being supported to stay in work, even if you have health conditions, and getting a fair chance in the job market, free of ageism, are essential for financial security in later life.  

What do the charts show?  

• When pensioners are divided into five groups according to their net weekly household income after housing costs, we see that the net income of both single pensioners and pensioner couples in the highest 20% of net income (quintile five) is 300% higher than for those in the lowest 20% (quintile one), with median net weekly incomes of £546 compared with £137 for single pensioners and £1,169 compared with £295 for couples.
• The median net weekly income of single pensioners in the lowest two-fifths of the net income distribution falls below the minimum income standard (MIS). For pensioner couples in the lowest 20%, their net weekly income is just above the MIS.  
• The percentage growth in the net weekly income of single pensioners between the 2010/11-2012/13 and 2020/21-2022/23 periods has been much greater for those who were already better off, with an 11% increase for the most well-off single pensioners compared with just 1% for the least well-off. As a result, inequality in pensioner income has increased over time.  
• The difference in the percentage growth in income for pensioner couples has been less dramatic, ranging from 7% for the least well-off to 12% in the fourth quintile.  

What does the chart show?

• The percentage of pensioners in relative poverty (after housing costs have been deducted) currently stands at 17%, one percentage point lower than the previous three-year period but four percentage points higher than the low of 13% in the 2011/12 to 2013/14 period. This is equivalent to 1.7 million people over state pension age in England (see our technical report for more details).
• Pensioner poverty rates vary across England, with the highest rate in Yorkshire and the Humber (20%), five percentage points higher than in the East Midlands and the South West (15%).
• Yorkshire and the Humber has experienced a seven percentage point increase in its pensioner poverty rate since the 2012/13 to 2014/15 period and a four percentage point increase since the 2018/19 to 2020/21 period.  
• Although the pensioner poverty rate in London is now about the same as the England average (19%), it has been consistently higher – and higher than for any other region – since the 2006/07 to 2008/09 period. Rates for London reached a high of 26% during the 2018/19 to 2020/21 period, making it the region that has seen the largest drop in pensioner poverty in recent years. It is unclear why pensioner poverty rates in London have fallen the most, although it should be noted that rates differ greatly between Inner and Outer London (34% and 24% respectively). It may be relevant that rates of private renting have fallen in Inner London due to people being priced out of the market.

We also know that:

• Relative poverty rates in 2022/23 ranged from 13% for pensioners aged 65 to 69 to 21% for those aged 85 and over.  
• Pensioner poverty rates are two percentage points higher for women than for men (17% compared with 15%), which is the result of workplace inequality across the life course.  
• The recent increase in pensioner poverty rates is because poorer pensioners have not experienced the same increases in occupational or personal pension income as people in the middle of the income distribution. In addition, the growth in state pension income has made some pensioners ineligible for additional means-tested support, thereby reducing their incomes overall. As a result, income growth for poorer pensioners has lagged behind that of the population as a whole.  
• Among working age adults, the relative poverty rate is 23% for people aged 60 and over, second only to the rate (25%) for those aged 16 to 24. 
• Research looking specifically at poverty rates in the final year of life finds that:
  • Among the pensioner population, 16% are in relative poverty during the final year of their lives, but the proportion increases to almost a third (32%) of people from a Black background and more than a quarter of people from Asian (27%) and Mixed/Other (27%) backgrounds.  
  • Across the regions – and consistent with the data shown in the chart – Yorkshire and the Humber has the highest poverty rate (23%) for pensioners in the final year of their lives. In 2023 more than half of the 20 local authorities with the highest percentage of pensioners dying in poverty were in the north of England and the midlands.
  • Across every region and country in the UK, people at the end of their lives are more likely to be in poverty than those who are not at the end of their lives.  
  • The risk of being in poverty at the end of life has increased for people of all ages since 2019, with a 23% increase for pensioners.
• Regional variations in relative poverty rates can be ascribed to significant industrial decline in northern regions, which led to job losses and lower economic growth than in the south of the country.  

What does the chart show?

• Poverty rates are higher for pensioners who rent (whether privately or in social housing) than for those who own their homes (outright or with a mortgage). In 2022/23, 35% of pensioners who rent privately and 34% who rent social housing were in relative poverty, around three times higher than the percentage who are owner-occupiers (12%).
• Between 2002/03 and 2022/23, pensioner poverty rates in the owner-occupied sector have had a range of eight percentage points, from a low of 10% in 2011/12 and 2013/14 to a high of 18% in 2002/03.
• In contrast, pensioner poverty rates in the social rented sector have ranged from 20% to 40%. Rates in this sector are back at their 2003/04 level, at more than a third (34%) in 2022/23.
• Pensioner poverty rates in the private rented sector have ranged from a low of 27% in 2007/08 to a high of 38% in 2003/04 and 2019/20. In 2022/23 the rate for pensioners renting privately was just three percentage points lower than this peak (35%).  
• The sharp spike in relative poverty rates among pensioners with a mortgage since 2021/22 (a rise of four percentage points) can be attributed to higher interest rates, which have pushed 320,000 people of all ages in the UK with mortgages into poverty. 

We also know that:

• Because the majority of older people are homeowners, the number of pensioners who are owner-occupiers and living in relative poverty (1.2 million) is higher than the number of pensioners who are social renters (0.6 million) or private renters (0.2 million).
• In the UK, financial considerations prevent someone from getting on the housing ladder in the first place. This leads to the increase in rates of private renting which, in turn, produces straitened financial circumstances. In the ten years between 2001 and 2011, there was a 27% increase in the number of people aged 50 and over renting privately, with a 54% increase in the subsequent ten years. It is estimated that 1.7 million pensioner households could be renting privately by 2040 (up from 500,000 today) with an attendant increase in the poverty rate among older people from 17% in 2022 to 23% in 2040.  
• Financial considerations may also play a role in the quality of the home that someone can afford to rent, with implications for health and wellbeing.  
• Trends in private renting are also seen as a risk factor for pension adequacy because renting increases the income needed to cover housing costs in later life.  
• Compounding the financial precarity of older renters, the percentage of people aged 50 and over who are eligible for Pension Credit but are not claiming it is more than twice as high among renters (14%) as those who own their home outright (6%) (see our technical report for more details).  
• Home ownership is no guarantee of financial security, even when there is no mortgage. In fact, 12% of homeowners aged 65 and over are in poverty. The need to maintain their homes can place considerable pressure on older people who have fixed incomes with no savings.  
• Cuts to the winter fuel allowance could force 50,000 pensioners in England and Wales into relative poverty next year, and a further 50,000 by the end of the decade.  

What does the chart show?

• Rates of material deprivation among pensioners vary across the country, from less than 5% in the South East to an average of 12% in London. (The rate in the North West is 8.5%.) There is wide variation within the London region – one in five (20%) pensioners living in Inner London experience material deprivation compared with fewer than one in ten (9%) in Outer London.  
• This means that there are around 120,000 pensioners in London and 110,000 in the North West who can’t afford key essentials.  

We also know that:

• Local authorities in the north of England make up the majority of local authorities in the poorest income deprivation quintile. In this quintile there are 33 northern local authorities, with 12 in the midlands and the East of England, 12 in London and the South East, and just one (Torbay) in the South West.  
• In contrast, the richest income deprivation quintile is almost exclusively made up of local authorities from the midlands and the East of England (20 in total), and London and the South East (30 in total).  
• Material deprivation among pensioners in the UK as a whole has increased by two percentage points in the year to 2022/23 (from 6% to 8%). This means that an additional 300,000 older people are unable to afford the basics they need.  
• The proportion of pensioners who are materially deprived is now similar to the proportion in 2013/14, a trend that can be attributed to the impact of the cost of living crisis.  
• Rates of material deprivation differ for different subgroups of pensioners. The material deprivation rate is:  
  • 13% for single pensioners living alone compared with 5% for pensioner couples;  
  • 23% for pensioners who are renting privately compared with 5% for pensioners who are homeowners (and 4% who own their homes outright);
  • 26% for pensioners from a Black background compared with 15% for pensioners from an Indian background and 7% from a White background;
  • 11% for pensioners living in families where someone is disabled compared with 5% in families where no one is disabled.
• There is a two-way relationship between disability and poverty. Poverty may result in disability through a higher prevalence of poor health linked to the social determinants of health. And disability may result in poverty as a result of the social causes of poverty, including underemployment, ineffective welfare and higher costs of living.
  • We have shown that households that include a Disabled person are much more financially precarious than those without a Disabled person. For example, they are more likely to be unable to meet any of an unexpected expense and to feel they have no control over their financial situation.
  • Disabled households need an additional £1,010 a month to have the same standard of living as non-disabled households, and the extra cost of disability, on average, amounts to 67% of household income after housing costs.
• The percentage of pensioners who could not afford to keep their home warm (one of the measures of material deprivation) more than doubled from 2% to 5% between 2021 and 2022 (an increase from 230,000 to 570,000 pensioners) while the percentage of pensioners who are unable to pay an unexpected expense of £200 has gone up from 6% to almost 8% over the same period. 

What does the chart show?

• A large proportion of people in every age group are experiencing financial pressures and are having to take steps in response to the cost of living crisis.  
• A third (33%) of people aged 50 to 69 and more than a quarter (28%) of those aged 70 and over are finding it difficult to afford their rent or mortgage payments.  
• A third (33%) of people aged 50 to 69 and just under a third (30%) of people aged 70 and over are finding it difficult to afford their energy bills.  
• Almost half of people aged 50 to 69 (45%) and people aged 70 and over (47%)  are using less fuel such as gas or electricity in their homes. 

We also know that:  

• The financial wellbeing of pensioners declined over the six-month period to November 2024, with the percentage of pensioner households that are financially secure falling by nine percentage points (from 49% to 40%).  
• The impact of the cost of living crisis has been much greater for poorer people who are more exposed to sharp rises in gas, electricity and food prices. This means that income poverty statistics understate the financial difficulties faced by poorer pensioners.
• Using their most recent cost of living tracker in October 2024, the Joseph Rowntree Foundation (JRF) found that 7 million low-income households (60% of low income households) had gone without essentials in the previous six months and 4.3 million low-income households (37% of low income households) were in arrears on at least one household bill or credit commitment.
• People aged 50 and over from minority ethnic backgrounds are much less likely to be financially secure than those from White British backgrounds (26% compared with 40%) and more likely to be in serious financial difficulty (22% compared with 12%). The situation is even worse for women aged 50 and over from minority ethnic backgrounds – only one in five (20%) are financially secure compared with a third (33%) of men.
• Many older LGBT+ people living in London are in a precarious financial situation, with 41% finding it difficult to manage financially. Although living in London comes with a high financial cost, which will play a role in these figures, it is also the case that a lifetime of discrimination affects someone’s ability to earn, save and plan for retirement.    
• Changes to the eligibility criteria for the winter fuel allowance are likely to push even more pensioners into financial hardship. Of the 10 million pensioners who have lost their winter fuel payment, 2.5 million have incomes below the Minimum Income Standard (MIS). In fact, one in four (25%) people aged 65 and over are now above the qualifying threshold for help with their energy bills even though their income is below the MIS. This proportion increases to nearly three in ten (29%) people aged 74 and over (1.4 million pensioners).
• Consistent with other regional inequalities, Yorkshire and the Humber has the highest percentage of pensioners who are at risk, with 37% of pensioners in this region no longer eligible for the winter fuel payment despite having incomes below the MIS, compared with 21% of pensioners in the more affluent South East and South West. This demonstrates that the cuts to the winter fuel payment will simply serve to entrench current regional inequalities in poverty.