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28 Low-income indicators (Great Britain):
- a) a reduction in the proportion of pensioners living in households with relative low incomes on the after housing costs measure;
- b) a reduction in the proportion of pensioners living in households with low incomes in an absolute sense; and
- c) a reduction in the proportion of pensioners living in households with persistent low incomes.
Baseline and trends: Baseline year – 1998/99. Data for the three indicators are presented in the chart and tables below, though information for the persistent low-income indicator is shown only in the table. While the tables aim to provide a comprehensive picture of progress by including data for a range of low-income thresholds, the chart and commentary focus on the 60 per cent of median income threshold for the relative and absolute indicators.
Percentage of pensioners living in low-income households (Great Britain)
The proportion of pensioners living in households with relative low incomes fluctuated between 1996/97 and 2001/02 fell between 2002/03 and 2004/05 and has remained at 19 per cent in 2005/06. There is a clear downward trend on the after housing costs measure, from 28 per cent to 17 per cent. The proportion of pensioners living in households with absolute low incomes showed a large fall from 25 per cent in 1996/97 to 10 per cent in 2005/06 before housing costs. On the after housing costs measure there was a large fall from 31 per cent to 8 per cent between 1996/97 and 2004/05, with 2005/06 remaining at 8 per cent.
Twenty per cent of pensioners lived in a household with a low income in at least three out of four years, on the before housing costs measure, at the baseline (1997–2000) which fell to 15 per cent in 2002–05.
| Relative low income | Absolute low income | ||||||
|---|---|---|---|---|---|---|---|
| Low-income threshold |
50% of median* |
60% of median |
70% of median |
50% of median* | 60% of median |
70% of median |
|
|
1996/97 | 11% | 22% | 36% | 13% | 25% | 39% |
| 1997/98 | 12% | 23% | 37% | 13% | 24% | 38% | |
| Baseline 1998/99 | 12% | 24% | 38% | 12% | 24% | 38% | |
| 1999/2000 | 12% | 23% | 36% | 10% | 21% | 34% | |
| 2000/01 | 11% | 22% | 35% | 9% | 18% | 30% | |
| 2001/02 | 11% | 23% | 35% | 7% | 16% | 27% | |
| 2002/03 | 11% | 22% | 34% | 6% | 14% | 25% | |
| 2003/04 | 10% | 21% | 33% | 6% | 13% | 23% | |
| 2004/05 | 9% | 19% | 32% | 5% | 11% | 20% | |
| 2005/06 | 9% | 19% | 30% | 5% | 10% | 19% | |
|
1996/97 | 12% | 28% | 39% | 15% | 31% | 41% |
| 1997/98 | 13% | 27% | 38% | 14% | 29% | 40% | |
| Baseline 1998/99 | 13% | 27% | 38% | 13% | 27% | 38% | |
| 1999/2000 | 12% | 26% | 37% | 10% | 23% | 35% | |
| 2000/01 | 11% | 24% | 36% | 7% | 18% | 30% | |
| 2001/02 | 11% | 23% | 37% | 7% | 14% | 25% | |
| 2002/03 | 10% | 22% | 37% | 5% | 11% | 21% | |
| 2003/04 | 10% | 19% | 34% | 6% | 10% | 18% | |
| 2004/05 | 8% | 17% | 29% | 5% | 8% | 15% | |
| 2005/06 | 8% | 17% | 29% | 4% | 8% | 13% | |
*Households reporting the lowest incomes may not have the lowest living standards. The bottom 10 per cent of the income distribution should not, therefore, be interpreted as having the bottom 10 per cent of living standards. This is a particular issue for lower thresholds, such as 50 per cent median. Other higher thresholds are less affected by this. Changes to Households Below Average Income data before 2003/04 were due to changes to the Family Resources Survey grossing regime, either through the method used or taking on board new, post-census population information. Further details are available at: www.dwp.gov.uk/mediacentre/pressreleases/2005/feb/iad-170205-frs.pdf. More recent changes since then are due to methodolgical improvements. |
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| 1991-94 | 1992-95 | 1993-96 | 1994-97 | 1995-98 | 1996-99 | 1997-2000 | 1998-2001 | 1999-2002 | 2000-03 | 2001-04 | 2002-05 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Before housing costs |
Below 60% of median | 17% | 17% | 17% | 19% | 19% | 20% | 20% | 21% | 19% | 18% | 16% | 15% |
| Below 70% of median | 35% | 33% | 34% | 35% | 35% | 36% | 37% | 37% | 37% | 34% | 34% | 31% | |
| After housing costs |
Below 60% of median | 18% | 17% | 17% | 19% | 21% | 21% | 22% | 22% | 18% | 16% | 15% | 13% |
| Below 70% of median | 35% | 34% | 34% | 34% | 33% | 33% | 34% | 34% | 33% | 31% | 30% | 27% | |
|
Note: Some of the figures have seen small revisions since the last Households Below Average Income (2004/05) report. This is due to changes to the base dataset made by the data suppliers of the British Household Panel Survey. Changes to Households Below Average Income data before 2003/04 were due to changes to the Family Resources Survey grossing regime, either through the method used or taking on board new, post-census population information. Further details are available at: www.dwp.gov.uk/mediacentre/pressreleases/2005/feb/iad-170205-frs.pdf. More recent changes since then are due to methodolgical improvements. |
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Definition: A pensioner is a person of State Pension age or above (65 for men, 60 for women).
Low-income thresholds are 50, 60 and 70 per cent of median household income (before and after housing costs):
a) relative low income – median income moving each year;
b) absolute low income – median income fixed at 1998/99 levels in real terms; and
c) persistent low income – low income in three out of the last four years (60 and 70 per cent of median only).
Data for thresholds of median income and full definitions are available in Households Below Average Income 1994/95–2005/06. Methodological improvements have led to some amendments to the data for the persistent low-income indicator, though the trend has not changed.
Data source: Households Below Average Income information based on Family Resources Survey and British Household Panel Survey data.
Further information
The percentage of pensioners living in low income households in Great Britain for various breakdowns of society, including by region and ethnicity, can be found in the latest Households Below Average Income 1994/5-2004/05 report at: www.dwp.gov.uk/asd/hbai/hbai2006/pdf_files/contents_page/main_content_page_hbai07.pdf 
(or alternatively as for children in indicator 2 )
http://www.dwp.gov.uk/asd/hbai/hbai2006/pdf_files/chapters/chapter_6_hbai07.pdf
The Persistent low income series is published in the report Low Income Dynamics Paper, 1991-2005: www.dwp.gov.uk/asd/hbai/low_income/Low_income_dynamics_1991-2004.pdf
Research Evidence
“Are ‘poor’ pensioners ‘deprived’?”
www.dwp.gov.uk/asd/asd5/rports2005-2006/rrep364.pdf
“Which pensioners don’t spend their income and why?”
www.dwp.gov.uk/asd/asd5/rports2005-2006/rrep334.pdf
Further Breaks
Rural Urban analysis:
Analysis: Rural Urban Classification at Local Authority level, England 1
Baseline data: 1996/97 Estimates are based on a three year average 2
Current data: 2004/05 Estimates are based on a three year average3
Relative Low Income4
- There have been positive reductions for Urban and Rural areas in the percentage of Pensioners living in households with income below 60% of the GB median in this reporting period, measured both Before and After Housing Costs.
- Of interest there were equal reductions for Rural R80 and Rural R50 (from 23% to 21%). Significant Rural recorded a 22% to 21% change measured under Before Housing Costs5.
- In the Urban categories Other Urban reduced from 22% to 19% whereas Large Urban increased (from 23% to 24%) by 2004/05. Major Urban remained constant at 20% in this reporting period.
- By 2004/05 After Housing Costs reported
positive decreases for both Rural and Urban categories, notably Rural
R50 (from 26% to 18%), Significant
Rural (25% to 18%) and Rural R80 (27% to 21%). In comparison Other
Urban reduced
(28% to 18%) in the same period.
Absolute Low Incomes
- Under the Before Housing Costs measure the dominant rural categories, Rural R80 and Rural R50 decreased 14 percentage points (to 12% and to 11% respectively) in this reporting period. In comparison Other Urban decreased 14 percentage points to 10% by 2004/05.
- Under After Housing Costs, Other
Urban decreased by 23 percentage points
(to 8%) compared with Rural R50 decreasing 21 percentage points (to
8%) and Significant Rural and Rural R80 decreasing 20 percentage points
(to
8% and to 10% respectively) by 2004/05.
More information at: http://www.defra.gov.uk/rural/ruralstats/ofa.htm (this link will take you to the Department for Environment, Food and Rural Affairs website)
- Explanation of the Classification at: http://www.defra.gov.uk/rural/ruralstats/rural-definition.htm
- 1996/97 uses data for 1994/95, 1995/96 and 1996/97
- 2004/05 uses data for 2002/03, 2003/04 and 2004/05
- Analysis on style of reporting Relative and Absolute: Relative relates to the year in question, for instance relative low income in 2004/05 is measured against the 2004/05 median income. Absolute uses a fixed year. The Absolute measure uses the median from this fixed year, where 1996/97 has been used for OFA 2006. The difference between the measures are that Absolute reflects a smoothed average over several years where the Relative reflects the year in question. This explains the difference seen between reporting on the same period from two perspectives.
- Since 1994/95 Before and After Housing Costs are used when presenting low incomes statistics where households are below the average income. See http://www.defra.gov.uk/rural/ruralstats/ofa.htm#glossary for more detailed information.