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| Counting the Cost for Pensioners |
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The individualistic current running through society has failed the elderly in many ways in recent years and it is no surprise that, despite increasingly well-documented statistics and anecdotal evidence, the plight of the elderly has remained a low political priority. If we look at the other end of the age spectrum we can see a stark contrast in the treatment of two of society’s most vulnerable sectors. In order to protect children, there is a great deal of legislation, whether that covers neglect or abuse by parents, guardians and other adults. For an adult to abandon care of their parent or other relative is not a crime at all, regardless of the fact that the person in question may depend on others for care. Despite increasing media attention over the years to cases of abuse in care homes, there are no specific criminal charges related to the abuse of the elderly. As a result, there are no official statistics that relate specifically to crimes of any nature against the elderly, whether the crimes are physical or financial. If the UK’s legal framework does not distinguish between a man of 18 and a man of 80, how can it possibly hold people to account when they let down society’s most vulnerable members?
So with family members and the wider community increasingly reluctant to play a significant role in the care of the elderly, it is not a surprise that government services are expected to step into the gap. However, at the same time that the government is expected by many to be the main provider of care for the elderly, the continuing existence of the state pension system in its current form seems increasingly unlikely.
The pension system, among other welfare reforms introduced over the course of the early 20th century, was initially conceived as a way to provide a safety net for the working population, as the taxes taken from salaries of workers would provide support for them in old age and ill-health. The contributions made by an individual over their working lives would be recompensed to cover their care and maintenance in old age. The payments made by the working population twenty or thirty years ago were used to pay for the pensioners of that time; now that the workforce of that era are now pensioners, the different benefits they are entitled to are funded by the contributions being made by the current workforce.
However, as the population structure of the UK has changed, the provisions made available to pensioners now cannot possibly meet their needs, nor are they a fair reflection of the taxes they have paid over their working lives. Life expectancy in the UK has increased greatly over the course of the 20th century; whereas in the 1900s, the average figure for life expectancy was in the mid-forties, in 1999 life expectancy for men was 75.1 years and for women 80.1 years. Thus the length of time for which the average pensioner is drawing the different forms of state benefit has lengthened considerably, now it is over ten years for men and over twenty years for women.
A natural result of the longer lives that people are living is that pensioners comprise a greater proportion of the population today than ever before, approximately 18%. According to the Department for Work and Pensions, in May 2003, 10,526,000 pensioners (99% of those eligible) were collecting at least one form of benefit. At the same time, as women have fewer children, at a later age, the ratio between the working population and the pensioner population has been decreasing. This ‘dependency ratio’ is a key statistic as it determines the number of taxpayers in relation to the number of benefit recipients. At the time of the Beveridge report, which led to the inception of the modern welfare state, there were roughly five people of working age per pensioner, a dependency ratio of 20%. According to the Office for National Statistics, in 2002, the dependency ratio had increased to 29.8%, i.e. for every pensioner there were only 3.55 workers. As this population trend continues, taxes will have to be raised just to keep the state pension at its already insufficient level.
The weekly rate for the state pension in 2003 was £77.45 for a single person and £122.80 for a married couple (over 80s get an extra 25 pence), which can be claimed by any UK citizen, regardless of how much money they have earned throughout their career. Since on their own these are insufficient to meet even the most basic needs, there is a range of means tested benefits that can be claimed by pensioners in addition to the pension. When these meagre pensions are paid out weekly to over 10 million people though, it adds up to a considerable amount of expenditure. In the financial year 2001/02, government expenditure on pensions exceeded £43bn, over 40% of total government expenditure on benefits and roughly 4% of GDP.
As the cost of providing the elderly with the state pension, other benefits and personal care services has increased, successive governments have scaled back and redefined the benefit system to limit expenditure on pensioners year after year. For example, the Thatcher government in 1980 started to link the state pension to prices rather than earnings, as the yearly increase in prices is generally less than that of earnings. So while the general trend is that workers will see an increase in their spending power during their career as average salaries rise, for pensioners this has been put on hold. Big increases in items such as the council tax, which are not related to general price levels, thus hit pensioners much harder than others; this is because the yearly increase in this tax could be 20 or 30 per cent, while the pension may increase by a few percentage points at most. The ostensible link between contributions and pensions has thus been undermined, saving the government billions on pensions. However, since this has just added to pensioner deprivation, more pensioners are entitled to income support (or the Minimum Income Guarantee as it is known for over 60s), so the burden has moved from one area of government expenditure to another, it has not been reduced entirely.
Governments of both major parties have provided a range of means-tested benefits, which they claim enable funds to be directed towards the most deprived. In reality, they are effectively another cost-saving measure. As many pensioners are unaware of the less well-known benefits, these go unclaimed altogether, while applying for others can be a daunting task. For example, in order to apply for Attendance Allowance, a benefit for the over-65s who require assistance at home, a 16-page form must be filled out. This new improved form replaced two forms that totalled 34 pages . It is not surprising that the patience and comprehension of many people is taxed by such bureaucracy, resulting in more than £2bn in unclaimed benefits each year.
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