Pensioner households are contributing almost £9bn a year in income tax generated from work, Aegon has found.
According to Aegon’s most recent analysis of income data, the 8.7 million pensioner households in the UK are contributing £8.6bn annually in earnings tax.
Under the assumption that each individual pensioner in a couple earns the same amount and both use their full income tax personal allowance, pensioner households are delivering almost £9bn annually in income tax, Aegon highlighted.
With the number of pensioner households continuing to work increasing from 12 per cent in 1997/98 to 17 per cent today, a rise in average earnings has also been recorded. Aegon noted that even after accounting for inflation, pensioner couples have experienced an increase in their weekly earnings by 30 per cent from £410 in 1997/98 to £534 today. Single pensioners have seen a 71 per cent increase in weekly earnings from £199 to £340.
Commenting on the analysis, Aegon pensions director Steven Cameron said: “Gone are the days when reaching state pension age meant a total end to work. Many people are choosing to keep working and earning, perhaps by cutting back gradually on the amount of work they do, even once they’ve started taking their pension. These people are contributing significant amounts to the nation’s finances through the tax they generate while also helping the broader economy through their work.
“We’re living in what has been described as a golden era for pensioners, with many benefiting from generous final salary pensions and increases to the state pension. When you combine this with earnings from post retirement work, it’s not surprising that many pensioners are living on very decent incomes.”
Nonetheless, Cameron warned that while both final salary pensions and increases to the state pension are unlikely to continue indefinitely, it is crucial that society evolves to encourage more people to work past retirement ages.