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Pensioners still face means testing in 2050

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20/07/2006

Two-thirds of pensioners may still be eligible for means tested benefits in 2050, the Pensions Policy Institute (PPI) has warned.

The pensions think-tank said that many people will still need means tested benefits until 2050, as the Government’s proposed pensions reforms – which proposed a rise in the state pension age in return for a more generous state pension, together with a new work based pension scheme – would not raise pensioners income sufficiently.

The PPI said that after the governments reforms most people would still have an income of less than £135 a week from the state pension.

And it claimed this could mean that the number of people eligible for means tested benefits, in the form of Pension Credit, would rise from around 4 million today to up to 6 million by 2050. This is way above government estimates that just one third of people would be eligible for the handouts.

The PPI added that the Government’s White Paper proposals changed the income distribution of older people very little, and if anything gave more to higher income people than lower income. It said this meant that more people would still claim Pension Credit in the future than the Government predicted.

Alison O’Connell, director of the PPI, said: “The uncertainties in the number of people still receiving low pensions from the state and who may be eligible for the means-tested Pension Credit in future need to be acknowledged, as do the continuing complexities in the system.”

“We urge the Government to publish more details of its own analysis to allow people to assess the critical assumptions made and understand how outcomes might vary with different assumptions”.

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