Poverty looms for pensioners

State pensions must be raised by €23 if pensioners are to avoid falling into poverty, according to Age Action.

Pensioners could lose 15-20% of their spending power by the end of 2023 putting many at risk of poverty unless the Government takes action in Budget 2023, advocacy group for older persons.

The organisation report the plight of OAPs hasn’t been as acute since the 1980s. They claim economic commentators have been too slow to realise just how bad this winter will be for older persons, many of whom will struggle to heat their homes.

“You’re hit everywhere” says retired teacher, Finnian Farrelly. “Electricity, fuel, food, everything, no matter where you go it’s increasing and there’s no improvement to the pension. It hasn't seen any increase in the last few years.”

The Cavan man observes the regular announcement of grants by cabinet ministers and surmises there is sufficient money in the public coffers to fund a pension hike.

“The government seems to have money to burn at the moment. [Minister] Heather Humphreys is announcing stuff every second week. Grants for this and grants for that. Holy God of almighty. "I don’t know where she's getting it," Finnian added.

“The government is making a fortune with the increase in fuel and so on. Something like 80% of fuel is taxed, isn’t it? That’s why fuel is so dear here compared to other countries, the income tax is huge. They’re milking it.”

A second pensioner, who wishes to remain anonymous, echoed Finnian's opinion, “The tax is crazy in this country, 40% like, nearly half your wages are gone. I think it’s crazy.”

Dr Nat O’Connor, policy specialist with Age Action reports that many pensioners are unaware of the financial impact the cost of living is having on them.

“Many people haven’t realised their losses yet, as their income and bank balance still looks the same as last year. It is only when someone goes to spend money that they see how their spending power has eroded and they have been left behind by rising prices.”

Based on average incomes and savings from CSO surveys, Age Action’s analysis finds that the average older person living alone will lose €1,532 in spending power by end-2022 and the average older couple will lose €3,364.Between the period 2021-2023, the total loss for older persons could be 20% or more of their spending power and most of them have no way of replacing this loss. While the nominal value of €1,000 remains the same, it will only buy €900 worth of home heating oil or groceries compared to one year ago, and potentially as little as €800 worth by end of next year.

Dr Nat O’Connor continued: “Age Action has examined the likely loss of spending power in 2022 and it is shocking. Over the course of 2022, the spending power of the full rate State Pension alone will go down by €589 for an individual or €1,118 for a couple.

“This loss of income means a struggle to buy home heating oil or to get a car serviced. It is causing older persons around the country to turn off their heating and to reduce their travel, because petrol and diesel are so expensive.”

Concluding her statement, Dr O'Connor stated that Age Action have published the analysis on the loss of spending power in order to raise the State Pension and protect older persons this winter.