Pensioners' income remains flat over 7 years

Pensioners' income remains flat over 7 years

Pension income has started to stall with pensioners earning little more last year than they would have seven years ago.

Pensioners had an average income of £304 per week in 2017/18, which saw little movement since 2010/11, when it stood at £297, according to data published today (March 28) by the Department for Work and Pensions.

The data also showed that the average income for pensioner couples was £454 per week last year, which is more than twice that of single pensioners, who had an average income of £213 per week.

According to the data, income from state and occupational pensions is on the rise, while that from personal pensions has remained flat since 2004/05.

This is despite the number of savers in receipt of personal pension income growing from 11 per cent in that year to 16 per cent in 2017/18.

According to Nathan Long, senior analyst at Hargreaves Lansdown, the state pension and income from company pensions has helped ensure pensioner income was flatlining and not falling.

He said: "More people are now receiving money from personal pensions, but having to take personal ownership of your money is a fairly new concept so the pay-out from these pots remains small.

"There’s yet more evidence that pensioners are being punished as a result of quantitative easing, with income from savings and investments on the slide."

Tom Selby, senior analyst at AJ Bell, agrees there has been a levelling off in pensioners’ income in recent years.

He said: "This is likely to reflect a number of factors, with the decline of DB provision in the public sector reducing incomes, and the state pension triple-lock working in the other direction.

"With the last of the baby boomers now approaching retirement and DB all-but dead in the private sector, there are serious questions about whether future pensioners will enjoy rising retirement incomes in the same way as their parents did. 

"This just rams home the importance of automatic enrolment in fostering a savings culture in the UK, with advisers playing a crucial role both in supporting those reforms and encouraging clients to save over-and-above this minimum level."

The DWP data also showed that semi-retirement is slowly growing in popularity, with 17 per cent of individuals currently receiving income through their employment, compared with 12 per cent in 1997/98.

However, the amount they are earning has fallen over time – the median pensioner income from employment peaked at £372 per week in 2010/11, which compares with £339 today.

Mr Long noted that "semi-retirement is gathering pace fairly slowly, as defined benefit pensions are still supporting more traditional retirements".

He added: "The average pensioner income from employment has fallen over time as people take on more part-time roles."