Pensioner income overtakes working households

A new study by the Resolution Foundation for the Intergenerational Commission has revealed that the income of pensioners has overtaken that of working age households for the first time.

According to the report, entitled As Time Goes By, typical pensioner households are now £20 a week better off than typical working age ones.

In comparison, just a decade and a half ago in 2001 the average pensioner was typically £70 a week worse off than their working counterpart, which shows the significant change that has taken place in recent years.

The study suggests that the most recent group of pensioners are responsible for this change, as while total income in the sector has grown by 30 per cent since 2001, for those who reached 65 in that year, it had only increased by seven per cent to 2014.

Occupational pensions appear to be the biggest driver of growth in this period, as they account for more than a third of gross pensioner income growth since 2001.

Another significant development is the increase in working pensioners, with the proportion of senior households in which at least one person works has grown from one in eight in 2001 to nearly one in five.

Housing is the other major factor with 73 per cent of pensioners now owning their own homes, up from 64 per cent in 2001.

The top fifth of pensioner households account for 74 per cent of employment income, 66 per cent of investment income, and 52 per cent of occupational pension income.

The research indicates that with falling home ownership levels for millennials, low generational income growth and less access to defined benefit pension schemes, it is likely that this trend will not continue indefinitely.

Link: As Time Goes By