Retiree income stats show 'startling' trend

Retiree income stats show 'startling' trend

Recent retirees are £43 a week better off than they were 10 years ago, figures from the Department for Work and Pensions have revealed.

In the 2016-16 tax year, retirees within five years of the state pension age received an average income of £357 a week.

That was up from £314 a week in 2005-6, a 14 per cent increase.

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However, retirees in every age group were on average better off than their counterparts 10 years ago, though there was little change on the previous year.

Former pensions minister and director of policy at Royal London, Steve Webb, described the results as "startling", and warned that pension income may have peaked.

Recent retirees were better off than older retirees. Those under 75 received £342 a week, while those over 75 received £258 a week.

The average income across all retirees was £296, up from £258 a week 10 years earlier, a 15 per cent increase. 

Single men were on average better off than single women, receiving £218 a week compared to the average woman's £201.

The research also found that 19 per cent of retirees were in the UK's top fifth income group across all age groups, more than the 14 per cent of retirees who were in the bottom fifth.

The proportion of retirees deriving income from private pensions increased from 66 per cent in 2005-06, to 70 per cent in 2015-16

Workplace pensions delivered by far the bulk of private pension income, rising from 59 per cent to 62 per cent.

Eighteen per cent of retirees derived income from a personal pension, up from 12 per cent 10 years ago.

Ninety-seven per cent of retirees were in receipt of the state pension. Earnings from non-pension sources, such as investment income, disability benefits, and income-related benefits all fell over the 10-year period.

Mr Webb said while there are "clearly some pensioners who enjoy good company pensions and have benefited from house price inflation, there are clearly also many who are not in such a fortunate position".  

He said any change to policy on state pensions would need to take "full account of the diversity of experience of pensioners in Britain today", adding it must not assume that pensioner living standards would keep on rising.

Commenting on the results, Peter Bradshaw, national accounts director at Selectapension, stressed that income from DB schemes would not continue.

"The government will push the state pension age towards 70 sooner or later, and few employers offer DB schemes any longer," he said. 

"For retiree pensions to continue to climb, there is a real challenge for those in the accumulation phase.

"Pension savers require more guidance, advice and support than ever before to build up a suitable retirement pot, and then access it appropriately for income  in retirement," he said.