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Pensioner poverty rates for those entering retirement today are down by two-thirds compared to previous generations in the 1980s peak, though children born today are facing record poverty rates, according to a new Nuffield-funded report published today by the Resolution Foundation.
The Generation of Poverty examines how poverty has changed over the course of people’s lives over the last six decades. It notes that while, on average, people have been most likely to face poverty in early childhood or late retirement, patterns of lifetime poverty have changed considerably for different generations.
The report finds that the relative poverty rate (after housing costs) for pensioners in their late 70s rose sharply in the 1980s and early 1990s, reaching almost 45% at its height for the “greatest generation” who were born between 1911 and 1925.
However, pensioner poverty has since fallen rapidly, with relative poverty rates at age 70 more than halving to below 20% for the next generation of pensioners – the “silent generation” born between 1926 and 1945. And the poverty rate for the post-war “baby boomer” generation who are now entering retirement has fallen to 15% – the lowest on record.
The Resolution Foundation says that this significant fall in pensioner poverty is due to three key factors: higher private incomes from private pensions and work; relatively lower housing costs compared to the rest of the population due to higher and earlier home ownership; and policy changes such as the introduction of Pension Credit in the 2000s.
The report notes that while the baby boomer generation is less likely to face poverty in retirement than previous generations of pensioners, the minority of boomers living in the private rented sector still face very high poverty rates (of 35%).
However, while major progress has been made on tackling pensioner poverty, the report warns that relative child poverty has been rising for those born over the last decade compared to their predecessors, following improvements in the mid-1990s and early 2000s. As a result, it finds that children born between 2016 and 2020 are facing the highest rates of early years poverty in 60 years, with close to 40% expected to be living in poverty at age two.
The report also warns that the “millennial generation” born between 1981 and 2000 are on course to face record rates of working-age poverty (at 25%).
The Foundation says that the huge fall in pensioner poverty shows that policy and societal change can lead to significant falls in poverty, and that undoing the very significant recent reductions in support for young families is key to reversing the current rise in child poverty.
Fahmida Rahman, Researcher at the Resolution Foundation, said:
“The risk of poverty tends to be highest in early childhood or later retirement. But those risks have fluctuated over time.
“While almost half of the pre-war ‘greatest generation’ lived in pensioner poverty during the 1980s and early 90s, a combination of economic tailwinds and policy success has since helped to reduce pensioner poverty by two-thirds for the baby boomers entering retirement today.
“But while poverty risks are down for pensioners, they are rising for younger working-age people and their children. Children born today are more likely to face poverty at the start of their lives than any other generation over the last 60 years.
“Policy makers must turn their attention to supporting young families, and they can start by reversing benefit policies that are currently increasing the risks and depths of child poverty for our very newest generation.”