Pensioners '£20 a week better off' on average than workers

Pensioners are now £20 a week better off than working households – reversing the situation of 15 years ago.

Research published by the Resolution Foundation found that in 2001 households relying on pensioner income were £70 a week less well off than those in work.

This reversal of fortunes is not true of all retirees but relates to those who have an occupational pension, own their home and may also be still be earning.

Adam Corlett, economic analyst at the Resolution Foundation, said: “One of the most intriguing aspects of the recent living standards story across Britain has been typical pensioner household incomes overtaking working-age households for the first time.”

“The main driver of pensioner income growth has been the arrival of successive new waves of pensioners, who are more likely to work, own their home and have generous private pension wealth than any previous generation,” he said.

Occupational pensions account for over a third of increases in pensioners’ income growth since 2001 while the proportion of pensioner households in which at least one person works has increased from one in eight in 2001 to nearly one in five.

Another quarter of income growth is down to pensioner benefits growing by 8% since 2001.

The report shows a sharp divide in wealth levels among pensioners. The top fifth of pensioner households account for 74% of employment income, 66% of investment income, and 52% of occupational pension income. In contrast, the poorest fifth of households are almost entirely reliant on benefit income.

The report for the Intergenerational Commission pointed out that closure of generous defined occupational pension schemes to younger workers means that the current generation of workers may not enjoy the same benefits when they are able to retire. The state pension age is rising to 66 between 2018 and 2020, to 67 between 2026 and 2028, and then to 68 between 2044 and 2046.