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UK pensioners must invest earlier, warns new report
By the time the average pensioner reaches 75 he is reliant on benefits, claims think tank study
Pensioners’ independent incomes are declining rapidly as they age, a report from the Institute for Public Policy research has revealed.
The think tank’s Older People and Well-being document shows the average UK pensioner gets most of his income from a combination of occupational pensions, saved earnings and investments but this makes up less than half his money by the time he reaches 75, by which time most of his income derives from benefits.
The document cites Office of National Statistics figures that show the number of over-75s is set to treble by 2020 – from 5 per cent of the population to 15 per cent – and called on the government to do more to persuade older people to manage their money effectively.
Table: Average weekly income for pensioners
|
Type of pensioner |
Weekly income (£) |
Weekly income from benefits |
Weekly income from occupational pension |
Weekly income from personal pensions |
Weekly income from investments |
Weekly income from earnings |
Other income |
|---|---|---|---|---|---|---|---|
|
Recently retired single pensioners |
277 |
134 |
59 |
8 |
19 |
53 |
4 |
|
Under 75 single pensioners |
255 |
139 |
58 |
6 |
21 |
28 |
3 |
| Over 75 single pensioners | 220 | 148 | 47 | 4 | 15 | 3 | 3 |
Source: ONS Pensioners' Incomes Series 2005/6
The 40-page report states: “The imperative to invest early to achieve lifelong benefits has dominated the policy agenda for the last 10 years.
“The Treasury has accepted that early, in age terms, intervention has long-term gains. However, to some extent this approach has worked against older people, who have not received anything like the resource, attention and focus as the young. This should be rectified. As people live longer, there is evidence that investment in early old age will pay off in older old age.”
Nicholas Tyler, chief executive of Oxford-based specialist elderly people’s financial advice firm NHFA, said: “My feeling is that there is a big future in the equity release market, which I think has seen an acceptance among a lot of people that it is not the big bad wolf that it has been painted as in the past. I also think we are going to see a decline in the amount of assets passed on through generations as people seek to maintain their standards of living into old age.”
