Research conducted by Pensions Policy Institute and Age UK shows that the proposed ‘single-tier’ state pension that offers all pensioners a flat-rate income, will reduce the number of pensioners in poverty faster than the current policies aimed at increasing the rate of pensions.
The research found that if the current policies remained in force, including the ‘triple lock’ guarantee, percentage of pensioners living in poverty will drop to 14 percent by 2017 and 11 percent by 2025.
However, the single-tier state pension scheme is expected to push down the percentage of pensioners in poverty to 10 percent.
“The triple lock is a great step forward for older people, but this research shows that the government could reduce levels of pensioner poverty much faster through other changes such as introducing the flat rate pensions for all”, said Michelle Mitchell, charity director at Age UK.
The report further added that if additional measures such as flat rate pensions are introduced, then percentage of retirees living in poverty will fall to nine percent by 2017 and seven percent by 2025.
Full implementation of means-tested benefits will accelerate the poverty reduction further six percent by 2025, but will be very difficult to achieve, said PPI.
“The current pension system is bewildering in its complexity and many older people do not claim the means tested benefits they are entitled to. We welcome government proposals for a flat rate pension which is likely to reduce poverty over time and encourage saving for retirement by making it clear what you can expect to receive from the state”, said Ms Mitchell.
“However it is essential that the government also introduces reforms to help current pensioners”, she added.