Context:

At the time of the report’s release, the authors highlighted that while much progress had been made in tackling pensioner poverty, it remained a key issue. Research from the Department for Work and Pensions revealed that 1.8 million pensioners were living below the poverty line, with certain groups particularly exposed to the risks. These groups include older pensioners, pensioners living alone and ethnic minorities.

The study:

This report aimed to:

• Explore what helps or hinders older people to manage their finances;
• Examine how access to resources can help older people protect themselves against the impact of (or help to manage) changes in their financial circumstances;
• Explore the impact of benefit receipt;
• Investigate personal skills and attitudes to money and finance in general.

The paper draws on research conducted for the Joseph Rowntree Foundation by the Centre for Research in Social Policy at the University of Loughborough. The research involved two stages of interviews, conducted two years apart. The first wave of interviews was in the Summer/Autumn of 2005, with the follow-up interviews being held in the Summer/Autumn of 2007. All participants were aged 65 or above at the date of the first interview.

With 91 interviews conducted at wave one, the authors had allowed for some attrition within the sample over the intervening two years. However, by staying in close contact with the participants they managed to ensure that 78 of the original 91 households were included in the follow-up. Almost half of the 78 households (38) were in receipt of means-tested benefits, while 28 of the households received health-related benefits. While some of the participants in the study reported being comfortably off, the report focuses on the experiences of those on lower incomes.

Key findings:

• Increased or additional benefit receipt had either increased income or made up for the shortfalls brought on by financial changes in many households. A proactive approach and support to claim benefits (including from the Pensions Service, Citizens Advice Bureau, friends and family) was highlighted as particularly helpful by the interview participants.
• However, the research also showed that a lack of knowledge about available benefits, combined with a perceived stigma of claiming benefits, deterred some people from claiming their full entitlement. Some participants, particularly older interviewees, saw benefits as a hand-out rather than an entitlement. Knowing others who were receiving benefits and justifying it by paying taxes while working helped them feel reassured.
• Support from family and friends; financial ‘back-up’; and personal financial knowledge and budgeting skills all helped a person’s financial wellbeing. Those with low incomes, who live alone, do not know how to access benefits or have no family nearby, are particularly vulnerable when faced with additional financial demands.
• The research highlights the need for support and information when dealing with current and potential future financial requirements. It also underlines how changing circumstances, especially deteriorating health, means older peoples’ financial circumstances and potential interventions need to be considered alongside other needs such as housing, travel and care needs.

• The stigma around claiming benefits can be tackled by changing the names of benefits to give claimants the sense of entitlement.
• The findings support the introduction of automatic benefit payments based on potential eligibility to overcome the stigmatisation connected with claiming benefits.
• The research stresses the importance of support from friends and family, while stating that the role of external organisations is crucial for people with no such support networks.
• The importance of relatively small payments/benefits (examples given are the winter fuel payment and free bus travel) should not be underestimated, particularly to people whose finances are delicately balanced.
• Policies need to focus on ensuring people have sufficient resources and life-chances when entering retirement, such as the correct financial resources, good health and knowledge about support services and financial entitlements.
• Overall, the study highlights the importance of the interplay between finances and a range of other resources. A holistic approach is suggested, ensuring financial knowledge and understanding is embedded in other walks of life (such as health and housing).

Points to consider:

• Attention was given to preserving the sample, resulting in a very low attrition rate over the lifetime of the research.

• This report is relevant to all stakeholders and policymakers with an interest in financial wellbeing among older people, and particularly to those who are commissioning or planning interventions in this area related to benefits or other payments.

• The research, while thorough, is based solely on qualitative interviews in one geographic region of the United Kingdom. Its findings cannot be readily generalised to the rest of the UK without further research.
• The findings are now dated and caution must be exercised when applying them to the current financial landscape. However, some of these points will still be pertinent.