Average pensioner incomes have risen by almost 14 per cent in the last decade from 2005/06 to 2015/16, the Department for Work and Pensions has reported.
According to the DWP's latest analysis of pensioner income trends, it has been noted that with pensioners where the head is 'recently retired' - within five years of the state pension age in 2015/16, have higher average incomes to those 'recently retired' in 2005/05, with £357 per week ini comparison to £314 per week.
After the deduction of direct taxes and other payments such as pension contributions and housing costs, the DWP found that the average pensioner income in 2015/16 was £296 per week. This indicates a significant rise from £258 in 2005/06.
Resultantly, both recently retired pensioners and pensioners where the head was younger than 75 had higher average incomes than those where the head was 75 or over. In both 2005/06 and 2015/16 the weekly average median income of those 75 or over was 75 per cent of that of under 75s. The DWP stated that the ratio of older to younger pensioner incomes has remained constant.
In addition, 41 per cent of pensioners received more than 50 per cent of their gross income from private sources in 2015/16. The percentage of pensioners in the top fifth of overall population income distribution is 19 per cent, and 14 per cent of pensioners are in the bottom fifth.
Furthermore, it was noted that there is generally a higher occupational income among single men. Single male pensioners, particularly those under 75, had higher average incomes of £224 per week in comparison to their female counterparts who received £203 per week.
Barnett Waddingham senior consultant Malcolm McLean, said: “Recently retired pensioners have significantly higher weekly average incomes than those who retired in 2005/06, £357 compared to £314. In 2015/16, 41 per cent of pensioners received more than 50 per cent of their gross income from private sources and more pensioners are now at the top of the income distribution rather than the bottom.
“This undoubtedly reflects the benefits of private pension saving and the opportunities that regular employment and the existence of good quality final salary schemes have provided to date for the fortunate generation involved.
“The big question is, will this trend continue or go into reverse? Especially with the demise of defined benefit provision, at least in the private sector, less secure employment and other economic pressures and uncertainties facing the country at the present time. The future of the triple lock on the state pension is another factor which could impact on pensioner incomes in the years ahead.”
Royal London director of policy Steve Webb added:“These startling new figures challenge the notion that pensioners will inevitably get richer and richer. Pensioner incomes in 2015/16 were no higher than a year earlier and newly retired pensioners were actually less well off than the year before. In addition, more than half of all pensioners get the majority of their income from state pensions and benefits.
Nonetheless, Webb noted that "Whilst 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. Any change to policy on state pensions need to take full account of the diversity of experience of pensioners in Britain today, and not simply assume that pensioner living standards will keep on rising.”