Never had it so bad

More than half of the increase is attributed to improved private pension income, which the ONS says has increased “seven-fold” over the same period. But the difference between a pensioner household with a private pension income, and one without, is that those without are not seeing cash benefits increasing sufficiently, so there is an overall inequality in income between the two.

That, frankly, should come as little surprise. If someone has chosen not to save, or not been able to save, into a private pension, then it surely would follow that they are going to have less money in retirement than someone who has.

The figures that are, bizarrely, not included in these calculations are housing costs. If you have a mortgage, or you have to pay rent, you are generally going to be worse off than those who have their own property, or have paid off their mortgage during the time you need to save for your pension. 

That is a statement of the bleeding obvious, so I really do not understand why they have excluded housing costs from these figures. A property is likely to be one of the largest single expenses for a family or individual each month.

That aside, though, the disposable rate of income for retired households has increased at an average rate of 2.8 per cent after inflation, compared to 2.1 per cent for non-retired households. 

The credit crunch

Retirees have also managed to avoid the worst ravages of the credit crunch too, with the income in 2016 at 13 per cent higher than the pre-downturn levels in 2008. Non-retired households have seen their income come down by 1.2 per cent over the same period.

When it comes to the current crop of pensioners – and these figures outlined by the ONS – it is hard to argue against them being better off. This generation has benefited handsomely from the final salary pension schemes of yesteryear, the gold-standard pension which meant an employee never had to worry about how a scheme was performing because they would be paid something like two-thirds of their final salary as a pension, no matter what.

But these pensions are now becoming as rare as hen’s teeth. The idea that companies could continue to write blank cheques to large numbers of employees based on the amount they were earning when they left, whereby the only responsibility the employee had was having some of his or her money taken from wages to put into the pension pot in the first place – and in some cases not even this – now seems laughable. Laudable, for sure, but yes, laughable.

Rising life expectancy

Rising life expectancy – although the latest figures show this may now be starting to level out – combined with lower investment returns, have forced most firms, with some notable public sector exceptions, to move towards a defined contribution (DC) model. But even here the government is whittling away at the amounts you can put aside with tax relief to benefit your own future. Higher earners may also see their tax relief cut in the November Budget, according to experts. We will have to wait and see what happens.

The latest government wheeze is to bring forward the date at which the state pension age will rise from 67 to 68 between 2044 and 2046, to between 2037 and 2039. So millions of us could now face a shortfall in our savings given the additional time we will be without this payment.

The gender gap

Women – as is so often the case – are also adversely affected when it comes to pension savings. Yes, we are generally the ones to take career breaks to have children, and then come back to work in a different role, or part-time, or perhaps in exactly the same role we left. In the meantime, our male colleagues may have been promoted and are earning more money. In turn, this means more goes into their pension.

Now, I can appreciate the argument that some would put forward here. But when we have had the Equal Pay Act 1970 in force since 1975, and yet still we do not have anything like equal pay more than 40 years later, there is something badly wrong.

The recent BBC revelations about pay with Chris Evans earning £2.2m for his work from the taxpayer, and Claudia Winkelman, the highest paid woman, getting £450,000 by comparison, is just the tip of the iceberg.

Fairness in pay and pensions needs to be across the board, and when you have government-run sectors clearly not complying with the law, how can you expect the rest of us to follow suit? If we want people to take care of themselves more in retirement, then things need to change – and they need to change now.

Alison Steed is a freelance journalist