Over 55s an average £30 per month worse off
Published on 15 February 2011 02:00 PM
Over 55s an average £30 per month worse off due to rising prices since September
Silver RPI shows a 6.0 percent increase in over 55s spend on energy since September 2010.
Latest data from the Silver RPI published by Age UK Enterprises, the commercial services arm of charity Age UK, shows that, since January 2008, the average person aged over 55 has experienced price increases at five percent above headline inflation measures.
Latest figures show the gap between the price rises experienced and headline RPI (1) now costs an average over 55 year old £907.20 (2) a year, which is a £30 (3) rise in the monthly cost of living since September 2010.
|Age band||% difference between silver RPI and headline RPI since January 2008 (4)||Average cost of gap between Silver RPI and headline inflation per year since January 2008|
|Average over 55||5.0%||£907.20|
The Silver RPI is published to coincide with the Bank of England Quarterly Inflation Report in February 2011 and shows that the gap between costs for those in later life and the general population has widened. This is due to the continued impact of low mortgage interest rates which have less effect on those in later life as they are less likely to carry mortgage debt, and in the last quarter, cost increases in products and services such as energy and food that over 55s spend proportionally more on.
The Silver RPI shows that between September 2010 and January 2011 the price of energy for the over 55s has increased by 6.0 percent. Energy now accounts for on average 3.6 percent of expenditure for those between 55 and 59 years old, almost doubling to 7.1 percent for those over 75, compared to 4% in the general population.
Age UK Enterprises, recognising the impact of rising energy prices on those in later life, is committed to helping customers manage their costs. While the sector as a whole has passed on price rises due to wholesale price increase, Age UK Enterprises in conjunction with E.ON delayed a six percent increase (5) until April 2011 for Age UK Energy customers, when the worst of the cold weather will be over, and has fixed prices for new customers until April 2013 (6). In addition, every year each Age UK Energy gas or dual fuel customer receives a guaranteed additional cold weather payment from E.ON, supplementary to the Government's Winter Fuel and Cold Weather Payments, and an additional payment for every day when the temperature drops below freezing (7).
Commenting on the findings, Gordon Morris, Managing Director, Age UK Enterprises said: 'The latest Silver RPI demonstrates the shocking impact of rising prices on over 55s who are now more than £907.20 a year worse off than official inflation measures estimate. There is a widening gap between the inflation experienced by the general population and those in later life, and this worsens with age. A typical 70-74 year old now experiences ‘real' price rises at 5.3 percent above headline RPI figures.'
He continued: 'The rise in everyday costs is in part due to over 55s spending proportionally more on products and services, such as utilities, that have increased rapidly in price in the last quarter. We believe the financial services industry has to do more to help consumers in later life manage their costs. This is why E.ON provided its Age UK Energy customers with over £4 million in Cold Weather Payments in 2010 and has created a fixed Energy price option for new customers until 2013.'
Erik Britton from Fathom Consulting said: 'The Silver RPI shows that inflation has been far higher over the last few years for those over 55 than for the general population. Inflation effects are not homogeneous, and measuring those differences helps those in later life plan for their financial future by taking them into account.'
The Silver RPI was developed by Age UK Enterprises in partnership with former Bank of England inflation specialists, Fathom Consulting, and is the most complete measure of cost increases in later life. It uses information from the Living Costs and Food Survey (LCF) to re-weight the 78 items that make up the official RPI and better reflect the expenditure patterns of over 55s. The measure is the first to consider inflation at five year age bands above 55 years of age and unlike existing ONS pensioner measures it includes all housing costs and households at all income bands.
The Silver RPI launched in November 2010 and is updated quarterly, with the methodology adjusted for the February report to include more up to date information on expenditure patterns. To reflect this, the weight attached to utility bills was increased, and consequently an increased estimate of the total price rises experienced by those in later life since January 2008.
- ENDS -
For more information or to speak to a spokesperson contact Natalie Orringe, Andy Martinus or Jo Roberts on 020 7360 7878 or email the press team.
- Headline RPI for over 55s is 5.1% (ONS: January 2011)
- The additional costs faced by older consumers is calculated by multiplying the difference in percentage change in prices faced by each age band and that faced by the population as a whole since January 2008. This is then multiplied by the average weekly expenditure for that age band and finally multiplied by the number of weeks in a year (52) to establish the annual cost of these extra price rises.
- Calculated by applying the average increase in prices since September 2010 experienced by those aged over 55 (1.95%) to the monthly cost of the RPI basket to those aged over 55 in 2008 (£1710.61).
- Average headline RPI rates: 2008 - 4.3%, 2009 - -0.78%, 2010 - 4.6%
- Just under 6% for dual fuel customers and 9% for electricity and 3% for gas customers
- For those new customers signing up to Age UK Price Protection April 2013 tariff
- Age UK customers aged 60 or over receive extra payment for every day between December and February that the temperature falls below freezing. The temperature is taken from the Pickering Weather Station in North Yorkshire, one of the coldest places in the UK
Notes to Editors
About Erik Britton, Director at Fathom Consulting: Erik Britton joined Fathom as a director in October 2007. He has 18 years of experience as a professional economist and was formerly a director at Oxford Economics. Prior to Oxford Economics, Erik was involved in economic modelling and forecasting, first at a London-based consultancy called MMD, and then at the Bank of England. At the Bank of England, Erik spent five years in the Monetary Analysis Division where he ran the Bank's UK macroeconomic model, co-ordinated its international forecast, and also managed a team of economists responsible for analysing the economics of the corporate sector.
About Fathom Consulting: Fathom Consulting is an independent consultancy which combines macroeconomic analysis together with financial market research. Fathom's team of economists combine a high degree of technical expertise with many years of practical experience in policy‐making and financial institutions. Their combined experience of analysing both the global economy, the UK and the Bank of England in particular, is unrivalled by any other private sector institution in the UK. A
About Age UK
Age UK is the new force combining Age Concern and Help the Aged. The Age UK family includes Age Scotland, Age Cymru, Age NI and Age Concern Enterprises - the trading arm of Age UK. Age UK, a charitable company limited by guarantee and registered in England: registered office address 207-221 Pentonville Road, London N1 9UZ, company number 6825798, registered charity number 1128267.
Age UK Enterprises
To fund its charitable activities, Age UK needs a constant flow of independent income. It seeks to achieve this through a balance of traditional fund raising and trading activities. The trading activities, through Age UK Enterprises, enable it to meet the needs of older people, through products specifically designed to meet these needs; quality products such as general insurance and energy Services. Age UK Enterprises is the commercial services arm of Age UK.
Age UK Enterprises incorporates: Age UK Energy, Insurance Services (car, home, travel and motor breakdown) and Age UK Guaranteed Funeral Plans.
Age UK Motor Insurance is now proudly on Which? Magazine's Recommended Providers List of car insurers. Which? Magazine analyse the whole UK car insurance market to find out which brands offer the best policies. Instead of picking Best Buys based on specific scenarios (that are only relevant in specific cases), the experts at Which? magazine focus on the quality of policies.
Age UK Enterprises is part of the Social Enterprise Coalition; an organisation that represents a wide range of social enterprises with the overarching aim of working in partnership for the creation of effective sector products, services and knowledge-sharing networks to help stimulate and encourage growth, development and sustainability of social enterprises in England.
Age UK Enterprises scooped up the ‘Customer Care Award' at the prestigious 2010 British Insurance Awards. The judges singled out Age UK Enterprises for its exceptional customer service which is provided by Ageas Insurance Ltd (formerly Fortis Insurance Ltd), as well as for glowing customer testimonials with a ‘world-class' customer satisfaction score of 85 per cent, and 89 per cent of customers saying that they would recommend Age UK Enterprises/Ageas Insurance Ltd.
Age UK Enterprises Limited is authorised and regulated by the Financial Services Authority for insurance mediation (311438). Age UK Enterprises Limited is registered in England and Wales No. 3156159, registered office: Astral House, 1268 London Road, London SW16 4ER. VAT Number: 710 3843 66. Age UK Enterprises Limited is a wholly owned subsidiary of Age UK (registered charity No. 1128267 and registered company No. 06825798) and donates its net profits to Age UK.
Age UK Enterprises is based at 4th floor, 207 - 221, Pentonville Road, London, N1 9UZ.
Age UK Energy Services
Age UK EnergyReward is a tailor made gas and electricity package provided by E.ON. Age UK Energy is a trading name of Age UK Enterprises Limited (a trading company of Age UK, which donates profits to that charity).
Registered in England and Wales No. 3156159. Registered Office: Astral House, 1268 London Road, London SW16 4ER. E.ON Energy Limited. Registered office: Westwood Way, Westwood Business Park, Coventry CV4 8LG, registered in England and Wales No. 3407430. Age UK is a charitable company limited by guarantee and registered in England. Age UK Group comprises of the Age UK Charity and its group of companies. Registered charity number 1128267 and registered company number 6825798. Registered address: 207-221 Pentonville Road, London N1 NUZ.
Age UK Group have worked closely with E.ON and have developed Age UK Energy/Reward, a great range of benefits, special offers, discounts and services which are all designed to help you save money on your energy. This great energy deal includes:
- Guaranteed minimum cold weather payment of £10 or £20 for customers aged 80 and over. An extra payment may also be paid for every day between December and February that the temperature falls below freezing*.
- Save up to 8% on your bills when you take electricity as well as gas and pay for both by fixed monthly direct debit**
- Free welcome pack including a hypothermia thermometer, your choice of free gift***, top energy saving tips and much more
- Doing more to help you save. As a responsible energy supplier, E.ON is dedicated to helping their customers use energy more efficiently. That's why they've launched a free service to make it easier for you to save energy and money. Visit www.eonenergyfit.com to find out more.
For more information call 0800 404 5010, drop in to a selected Age UK office****.
* The £10/£20 cold weather payment from E.ON is only applicable to Single Gas and Dual Fuel customers. It will be credited as a rebate in March and will be shown on the following bill. As a gas customer, you may also receive a payment based on the number of days the temperature falls below freezing between December and February. The temperature is taken from the Pickering Weather Station in Yorkshire, one of the coldest places in the UK.
** Discounts are not payable on final bills.
***Whilst stocks last. If product is unavailable, alternatives will be offered.
****Not all Age UK offices offer all Age UK products. Please check (by telephoning your local office) before arranging a visit.
E.ON is one of the UK's leading power and gas companies, and has around 5 million electricity and gas customers, covering domestic, SME and industrial. E.ON been working with Age UK since 1999 to offer Energy Services.
In October 2010, E.ON call centres reached the Top Ten in latest research from the Top 50 Call Centres for Customer Service. One of the UK's leading power and gas companies achieved tenth place and came top of the Utilities sector with a score of 89.10% against an overall Top 50 average of 86%, in the UK's biggest ever call centre benchmarking exercise, conducted by independent market research company GfK Mystery Shopping.
E.ON also offers CaringEnergy - a single source of help to reduce energy bills, improve energy efficiency and maximise the income of homes which are currently in or at risk of fuel poverty. Through CaringEnergy customers can get help with free or discounted cavity wall and loft insulation, a free Benefits Entitlement Check and access to a fund which supports low income households and those facing financial difficulty.
E.ON Registered office: Westwood Business Park, Coventry CV4 8LG. Registered in England and Wales No. 3407430.