Retired household incomes continue to rise

Retired household incomes continue to rise

Over the last 40 years the incomes of pensioners have continued to rise; in particular for those with private pensions.The income of the average retired household has been growing at a faster rate over the last 40 years than that of the average working household, according to data released by the Office for National Statistics (ONS). 

The typical income of retired households grew 13 per cent in the eight years from 2007/08 to 2015/16, compared to a 1 per cent fall for working households. 

In addition, the data revealed the drastic differential between those with a private pension and those without: The 79 per cent of retired households with private pensions had a disposable income which was on average 1.6 times higher than those without. 

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In 2015/16, this meant that the weekly average disposable income in retirement for a household with a private pension was £534.75, compared with £331.33 for one with no private pot. 

Moreover, the percentage with a private pension has increased steadily over the past 40 years: in 1977 only 45 per cent of retired households had an additional pension. 

Adam Corlett, senior economic analyst at the Resolution Foundation, says: ‘Today’s stats show again that the economy has delivered very different results for retired and working households over the last decade.  

‘But the data also shows how important private pensions are to this story, as they grew 41 per cent over the same period. This is great news for pensioner living standards, but has been accompanied by a rise in inequality between retired households as some have benefited more than others. 

‘Crucially, we also need to ensure that today’s workers have the resources and income growth needed to give them the same prospects in retirement.’ 

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Former pension minister and director of policy at Royal London, Steve Webb, says: ‘In previous generations being elderly was a by-word for being poor. That has changed dramatically in the last forty years, with pensioner incomes nearly trebling whilst the incomes of the work age population rose much more slowly.  

‘The big danger is that we are living off former glories. The big growth in pensioner incomes is driven by people retiring with good company pensions. But today’s workers are not building up pensions that are anywhere near as generous. Whilst pensioner poverty rates have dropped sharply this could go into reverse if today’s workers do not build up their own pensions at a much faster rate than they are at present.’ 

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