Page last updated at 10:57 GMT, Wednesday, 27 January 2010

Pensioner poverty 'drops by a third'

Two pensioners
Fewer pensioners are living in poverty, the ONS says

Poverty among pensioners shrank by almost a third between 1998-99 and 2007-08, the Office for National Statistics (ONS) has said.

There were 2.9 million poor pensioners 11 years ago, but their number had dropped to two million two years ago.

Poverty is officially defined as living on 60% of the average income, once housing costs have been paid.

However, the ONS also said that in 2007 one million single person households, aged 60 or over, were in fuel poverty.

Fuel poverty is defined as a situation where someone needs to spend at least 10% of their income on heating their home.

The ONS said the 60-and-over age group was the one worst affected by the problem.

Since 2007, the government's own research has shown a big rise in general fuel poverty as a result of the sharp rise in the size of household fuel bills.

Pensions crucial

The ONS's research found that the distribution of incomes had become more unequal in the past three decades, for both working and retired households. However, income inequality lessens once households retire.

As a group, pensioners have come to rely less on the state pension for money to live on.

In 1977, it provided 53% of the average income of retired households, with a further 18% coming from company or private pensions.

However, by 2007-08 the two sources of pension income were roughly equal. Retired households were receiving 36% of their average incomes from company and private pensions, but just 37% from the state pension.

The ONS said that income from a company or private pension scheme was a crucial factor in determining whether someone would be well off in retirement or not.

"In 2007-08, pensioners with private pensions were more likely to be in the higher income quintile groups [the top 20%] for the whole population, while those without private pensions were more likely to be in the bottom income quintile groups," the ONS said.

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