Tackling pensioner poverty

What we know

Helping people prepare for their retirement is an important part of our business at Legal & General. We pay out over £1bn a year to people who have saved their pensions with us.

The number of people living longer is growing which is good news for us all. According to the Office of National Statistics by 2025 one in five of the UK population will be 65 or over. One of the challenges for us all is that in our experience most people underestimate how long they are likely to live and how much income they will need to support a comfortable retirement.

As the state struggles to deal with the extra burden placed on its resources, responsibility to ensure a comfortable retirement will revert to the individual. This is where our products and expertise can help.

So what of the next generation of people retiring? The UK is in the middle of trying to understand how the baby-boomer generation born in the 60's will pay for their long-term care in retirement. It's an issue of intergenerational fairness. Baby boomers can't expect the next generation to pick up the bill. This generation has had the benefit of the 1990's property boom but the current generations, X and Y, are working in an environment of student grants, house price uncertainty, shortfalls in pension schemes and an ever-extending retirement date.

The issue of an affordable retirement is of national importance for generations to come. We believe that there is a potential here for government, industry and organizations such as Shelter and Age UK to work together to share this burden.

We are also collectively responsible for those retired people who face poverty in their retirement. Those who have fallen between the cracks and need a helping hand.

What we are doing

We have responded to these challenges in a number of ways, including:

Paying for a "Handy van" service to install additional security features in the homes of vulnerable elderly people, which offers a similar sense of reassurance in their homes as a pension does to their finances. Investing in security features also enables customers to qualify for a discount of up to 10% on home insurance products, freeing up valuable cash to spend on other essentials.
Providing specialist products, including Postcode Annuities, which enable us to provide higher pensions payments to those living in areas with younger than average mortality levels
Partnering with SAGA on a project that gives customers a wider choice of annuities to better meet their needs and get better value for money
Lobbying against new European legislation, with the support of Age UK, which would require us to reserve 20% more capital, resulting in lower annuity rates and pensions payments, and increased dependence on the UK Government by the elderly
Being founding co-sponsors of the EAC Housing Awards, which give a voice to residents of retirement housing, assisted living and extra care housing to recognize best-practice in design, services and well-being in retirement
Looking locally in areas of acute need for support. For example, we worked with Age Concern in Wales to help pensioners in the region unlock £5.3m in unclaimed benefits in 2009 enabling the service to unlock a total of £19m worth of unclaimed benefits since its inception in 2002.

What next?

The issue of long-term care is an important debate in the UK in 2010. We have responded with our expert views to the Governments Green paper on Care Support Independence in the UK.

We will continue to work with organizations such as AGE UK and Longevity Science to better understand the issues faced by pensioner at a practical level and then use that experience at a product design and lobbying level to shape services for the future.