Unwell over-50s at risk of poverty unless UK benefits rise, study finds

Stay informed with free updates

Simply sign up to the UK employment myFT Digest — delivered directly to your inbox.

Thousands of Britons who are still up to 14 years away from receiving their state pensions and are too sick to work risk being consigned to years of poverty unless the government reforms working age benefits, researchers have concluded.

The Health Foundation think-tank said that welfare policy had yet to adjust to these new realities and called on ministers to bolster the value of universal credit.

The foundation’s call for more generous support through the welfare system is at odds with a new government drive to reduce the number of people claiming sickness benefits — which has climbed steeply in recent years, with more than 2.3mn people receiving the highest level of support.

“Historically government policy, in particular in the social security areas, hasn’t really ever got to grips with effectively dealing with people with long term health conditions,” David Finch, the study’s author, criticising government plans to toughen eligibility rules for working age benefits.

Previously, many people had responded to the progressive rise in the state pension age by choosing to work for longer, the foundation said. However, since early 2020, an additional 235,000 people — currently aged between 53 and 62 — had declared themselves unable to work, reporting long-term sickness as the principal reason. 

This represented a 34 per cent increase in the number of people approaching state pension age who were economically inactive.

In contrast, in the three years from the first quarter of 2016, only 15,000 people had become economically inactive due to long-term sickness — just a 2 per cent increase. Most people who leave the labour market due to sickness in their 50s are unlikely to re-enter.

The government launched a consultation last month on rule changes that could push many people with long-term health conditions on to a lower rate of benefits and require them to look for work.

“Are people really three times sicker today than they were a decade ago? No, of course not,” UK prime minister Rishi Sunak said last week. “It’s not good for our economy, it’s not fair on taxpayers who have to pick up the bill and it’s a tragedy for those two million people being written off.”

The universal credit standard allowance for a single working-age person aged 25 or older is equivalent to £85 per week, rising to £174 per week for those deemed unable to work due to ill health. Pension credit is worth around £201 a week. 

The Office for Budget Responsibility fiscal watchdog published research in July suggesting the acute increase in those receiving sickness benefits was partly because changes to the welfare system had pushed more people to claim support.

The OBR research also reflected the worsening state of health across the UK population, and the fact that the workforce was ageing. 

However, Finch suggested that because the state pension age had increased faster than people were able to keep working, there was a need for “some form of mitigation”, particularly for those having to wait an extra year for their pension due to the planned rise from 66 to 67 from 2026.

He suggested “near-term” steps, including opening up practical support to people with long-term health conditions, such as voluntary access to existing employment programmes.

He highlighted the prospect of shorter than anticipated retirements in future, noting that life expectancy already seemed to be falling, with a man aged 65 in 2023 expected to live on average another 20 years — 2.7 years less than under 2008-based estimates.

The Department for Work and Pensions said the government had channelled an extra £2bn into measures to help people with health conditions or disabilities stay in work.