The number of UK retirees receiving a private pension income has almost doubled from 45 per cent in 1977 to just under 80 per cent last year, the Office for National Statistics has revealed.

According to new data published by the ONS today, 8 August 2017, the disposable income of the 79 per cent of retired households with private pensions in the financial year ending 2016 was on average 1.6 times higher than those without.

The ONS noted that income inequality is rapidly increasing as state benefits decrease. Comparing the overall income of retired households with private pensions and those without, those with had an income that is 60 per cent higher than those without. In 2015/16 retired households without private pensions had a weekly income of £26.14, while those with a private pension received £365.87 per week. This is up from £26.06 and £121.30, respectively, in 1977. The earlier figures have been adjusted in line with prices, including inflation, to 2015/16.

A further 95 per cent of today's retired households had a disposable income above £10,000 in 2016, compared to their counterparts in 1977 where only around a fifth had a disposable income of over £10,000 a year.

Although the state pension income almost doubled in the 40 year period, over half of the increase in gross income for average retirees is a result of an increase in private pensions income, the ONS said.

Nonetheless, the data also highlighted that the income of the average retired household has been growing at a faster rate over the last 40 years than the average non-retired household.

However, at the year-end 2016, a retired household's average income was still less than the average income for a non-retired household.

Royal London director of policy Steve Webb said: "‘In previous generations being elderly was a by-word for being poor. That has changed dramatically in the last 40 years with pensioner incomes nearly trebling whilst the incomes of the working age population rose much more slowly.

However, Webb noted that this increase must not lead to complacency among today's working generations. He added: "The big danger is that we are living off former glories. The big growth in pensioner incomes is driven by people retiring with good company pensions. But today’s workers are not building up pensions that are anywhere near as generous. Whilst pensioner poverty rates have dropped sharply this could go into reverse if today’s workers do not build up their own pensions at a much faster rate than they are at present."

AJ Bell senior analyst shared a similar view: “Government reforms, primarily automatic enrolment, should go some way to improving retirement outcomes in the UK but savers need to realise that the responsibility is firmly on their shoulders. For the majority the auto-enrolment minimum total contribution of 8% won’t be enough and the state pension, while providing a useful base income, is not sufficient to cover most people’s costs. This will particularly be the case for those who still have a mortgage to pay off in retirement or need to pay for long-term care.

“But coverage is only part of the story and it is now incumbent on government, regulators and the wider industry to ensure people feel confident enough in the pension system to save enough to fund a decent retirement.”

Malcolm McLean commented that "much progress" has been made with pension saving over the last 40 years, but there "is still much to do to maintain progress and avoid slipping backwards."

McLean similarly advised: “It is important that today’s workers are encouraged to take advantage of being auto-enrolled into a workplace pension scheme and start saving at the earliest possible ages. As a matter of urgency, we must continue to strive to find a way to bring the self-employed into the process.

“If the pensioners of tomorrow are to going to catch up with, and at least match, those of today there can be no room for complacency in addressing these issues.”

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