Weak income growth amongst poorer pensioners has triggered an increase in the level of pensioner poverty seen since 2011, research from the Institute for Fiscal Studies (IFS) has revealed.

The research, which was funded by the Joseph Rowntree Foundation (JRF), showed that pensioner incomes increased much faster than incomes of working-age people from the early 2000s until 2011.

Since then however, average incomes of pensioners have grown no faster than anyone else’s, with the incomes of both pensioners and those of working age grew by 12–13 per cent between 2011 and 2022.

But the pattern was very different for poor pensioners, as, over the same period, incomes at the 10th percentile grew by 5 per cent, meaning that the gap between poorer pensioners and those on average incomes grew.

Relative pensioner poverty also rose between 2011 and 2022 from 13 per cent to 16 per cent, equivalent to an additional 300,000 pensioners in poverty.

The IFS suggested that poorer pensioners have fallen behind since 2011 in part because they have benefited neither from increases in private pension incomes nor growth in employment incomes that have boosted incomes for middle-income pensioners and working-aged people respectively.

In addition to this, the IFS pointed out that while poorer pensioners have seen increases in their state pensions, this has not had big impacts on total incomes, as these higher state pensions have meant they are increasingly ineligible for means-tested state support.

Indeed, the research showed that average benefits other than the state pension paid to pensioners fell by 15 per cent from 2011 to 2022, not due to cuts to the generosity of the pensioner benefits system, but because of rising state and private pension incomes reducing their benefit entitlements.

The IFS also found that, during the cost-of-living crisis, measures of income poverty look to have understated the financial difficulties facing poorer pensioners, as while the relative poverty rate for pensioners fell from 18 per cent in 2019 to 16 per cent in 2022, the proportion of pensioners who reported being unable to afford key material items rose from 6 per cent to 8 per cent over the same period.

Furthermore, the proportion who could not afford to heat their home rose from 2 per cent to 5 per cent.

Commenting on the findings, IFS research economist, Anna Henry, said: “Pensions and pensioner incomes got little attention during the election campaign.

"In part that is because of a sense that pensioners have been doing better than others, and indeed the gap between the average incomes of pensioners and of working-age people narrowed dramatically especially in the lead-up to, and during, the Great Recession.

“But reductions in pensioner poverty seen before 2011 have gradually gone into reverse.

"The new government will need focus on current and future challenges for pensioner incomes, especially those of low-income pensioners, and not assume that everything will always be getting better.

"Taking action to raise the low rate of take-up of pension credit – the key means-tested benefit for poor pensioners – would be a natural option.”

JRF chief analyst, Peter Matejic, also stressed the need for ministers to do more to address the low take-up of pension credit, arguing that this acts as a "brake" on its power to reduce pensioner poverty.

"This is a problem across the benefits system, with many people not claiming support they are entitled to. There is no good reason more can’t be done to educate and inform people about their entitlement, as well as to simplify the application process," he stated.

"This report proves political choices can bring down poverty, as they did for pensioners, so we hope the government will prioritise making choices that reduce poverty for everyone."

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