Retirees who receive the older version of the state pension face a yearly income gap exceeding £8,000 when measured against the amount needed for basic living expenses, new research reveals.
The Joseph Rowntree Foundation's analysis indicates that a single pensioner requires £17,400 annually before tax to maintain a minimum living standard.
Those on the pre-2016 basic state pension receive £9,175 yearly, creating a shortfall of £8,225 for approximately 1.5 million retirees who lack additional earnings-related payments.
This gap persists despite the triple lock mechanism that increases pension payments annually.
The newer state pension, introduced in 2016, provides £11,973 annually for those with full contributions. However, retirees under the previous system face significantly lower payments.
Whilst many pre-2016 pensioners receive supplementary earnings-related payments through Serps, roughly 1.5 million individuals rely solely on the basic pension amount.
The Joseph Rowntree Foundation's research establishes the £17,400 threshold based on public consensus regarding income necessary for essential needs and societal participation.
Even accounting for potential benefits like pension credit and winter fuel payments, these older pensioners remain below the minimum income threshold.
The shortfall affects those without supplementary earnings-related benefits, leaving them unable to meet essential costs despite claiming available support.
The Office for Budget Responsibility estimates that state pension costs could reach £200billion by 2073
| GETTYResearch from Pensions UK projects that by 2040, nearly three million pensioners will struggle to cover their basic requirements with their retirement income.
The Office for Budget Responsibility estimates that state pension costs could reach £200billion by 2073, driven by increased longevity and triple lock protections.
Specialists warn that a concealed stratum of pensioner hardship exists, obscured by headline figures about state pension rises that don't reflect the reality for millions dependent on basic payments.
The current pension contribution system requires workers to save at least five per cent of their wages
| GETTYThe current pension contribution system requires workers to save at least five per cent of their wages, supplemented by three per cent from employers and government tax relief.
The government's pension review is examining whether these minimum contribution levels require adjustment, though changes won't occur during this parliamentary term.
Experts emphasise that present benefit levels fail to enable recipients to afford essential items, whilst highlighting the necessity for working-age individuals to accumulate adequate retirement savings.
The disparity particularly impacts older pensioners who have limited opportunities to supplement their income.
The government's pension review is examining whether these minimum contribution levels require adjustment
| GETTYPeter Matejic, of the Joseph Rowntree Foundation, stated that pensioners "with no personal pension income fall below the minimum income standard even if they are claiming pension credit and would have received a winter fuel payment in winter 2024."
Charlotte Kennedy, from wealth management firm Rathbones, said: "Even those receiving the full state pension face a sizeable income gap and many older pensioners, who often miss out on higher payments and have fewer chances to boost their income, are being left behind."
Becky O'Connor, of pensions platform PensionBee, noted: "There is a hidden layer of pension poverty and the majority of pensioners who rely on basic state pension are susceptible. Headline increases to the new state pension hide the reality for millions."