The hidden pension problem putting single people at risk

The number of pensioners living in poverty has been climbing steadily since reaching its lowest point in 2013/14, according to a major new analysis from LCP.

And the research suggests single pensioners are facing a particularly serious squeeze, with poverty rates now almost twice as high as among pensioner couples.

The report, Being single in retirement – a key issue for the Pensions Commission?, also found that two thirds of single pensioners living in poverty are women.

Steve Webb, report author and LCP partner, warned that the idea pensioner poverty had largely been dealt with was wrong: “Some of the discussion of the position of pensioners seems to imply that pensioner poverty is largely solved.”

But he said the figures showed the opposite was happening: “Since 2012/13, pensioner poverty has been rising steadily, predominantly amongst single pensioners.”

The overall pensioner poverty rate rose from 15.7% in 2012/13 to 18.6% in 2023/24, based on the consistent figures used by LCP.

Single pensioners face biggest risk

The research found poverty among single pensioners is now nearly double the rate recorded for pensioner couples.

While poverty among pensioner couples has remained relatively stable since 2012/13, it has climbed sharply among those living alone.

The fastest rise has been among people who have never married, followed by divorced pensioners.

There were 1.5 million divorced single pensioners in England and Wales in 2024, triple the number recorded in 2002.

There are also now around 800,000 single pensioners who have never married.

Sir Steve said the figures raise important questions about how the pension system deals with changing relationships and family structures: “Issues such as inadequate pension sharing at the end of a relationship and the continuing gender pension gap mean that women in particular are at higher risk of poverty in old age.”

Women are particularly vulnerable to pension poverty, says the report

With two thirds of single pensioners in poverty being women, LCP said policies aimed at increasing women’s independent retirement income could help reverse the trend.

Sir Steve said there were practical steps the Government could take: “But there are things we can do about this problem, including encouraging couples to share their pension wealth more easily.”

He also highlighted the changing nature of relationships in Britain, particularly the growth in couples who live together without marrying: “We also need to look at social changes such as the growth in cohabitation and understand what these means for later life finances.”

What could change and how could it influence pension sharing rules?

LCP has suggested several measures for the Government’s Pensions Commission to consider.

These include making it easier for a higher-earning partner to contribute to the pension of a lower-earning spouse or partner, with the lower earner potentially benefiting from higher-rate tax relief.

The report also calls for pension-sharing rules to be examined when long-term cohabiting relationships end.

Currently, there is no formal mechanism for pension sharing when an unmarried couple separates.

Recommended reading

Sir Steve said the issue should be given serious consideration as part of the Government’s review: “It is vitally important that the Pensions Commission looks in depth at these issues when drawing up its blueprint for the future of pensions.”

LCP also suggested reviewing whether the introduction of no-fault divorce in 2022 has affected pension sharing, while considering whether joint-life annuities should become the default.

The research comes as pension policy faces increasing scrutiny, with the figures highlighting the potential risks facing people who reach retirement without a partner’s pension wealth to rely on.