How important are state transfers for reducing poverty rates in later life?

Abstract

ABSTRACTFinancial welfare in later life is of prime concern as the funding of pensions and care rises up policy agendas. In this context, work and family histories are well known to impact on late-life income, generally reducing state and private pensions for women. In a political context where benefits are under threat as part of the retrenchment of the welfare state, we consider two key questions. First, how do state pension and benefit transfers interact with work and family histories to reduce poverty risks in later life? Second, who is kept out of poverty by state benefits and transfers? Using data from the English Longitudinal Study of Ageing, we examine how work, family and health histories are associated with poverty in later life and estimate how far and in what ways state pensions, income support and disability benefits play a mediating role. We conclude that state support is key to maintaining incomes above official poverty lines for substantial numbers whose work, family and health histories would otherwise have led to their incomes falling below these lines. While disability benefits are designed to compensate for the additional costs of disability, it is likely that many in receipt experience poverty (even though they are not captured in official poverty statistics); even more so for those incurring the costs of disability but not in receipt of these benefits.