Commenting on today's publication by ONS of statistics on the incomes of pensioners and working age households over the last forty years, Steve Webb, Director of Policy at Royal London said: "‘In previous generations being elderly was a by-word for being poor. That has changed dramatically in the last forty years with pensioner incomes nearly trebling whilst the incomes of the work age population rose much more slowly. 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’.
The latest release from the Office for National Statistics shows how the income levels of retired households have changed over the last 40 years. Malcolm McLean’s, Senior Consultant at Barnett Waddingham said: The growth in the average annual disposable income of retired households, over the last 40 years, is impressively large. The fact that over half of the increase is attributed to a sevenfold increase in private pension alone is very significant. This shows the value of making private pension provision and not relying on the state pension alone.
“That said, there still has to be a concern about the levels of income inequality that exist between individual households, particularly so in a comparison between “the haves and the have nots” when it comes to pension provision being made.
“Although looking at the picture in the round it is clear that much progress has been made over these last 40 years. However, there is still much to do to maintain progress, and avoid slipping backwards, in relation to retired household incomes.
“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.”
Commenting on today’s ONS figures highlighting pensioner income, Steven Cameron, Pensions Director at Aegon said: Pensioners in the UK have never been better off financially than they are today. In the last 40 years, the average pensioner has catapulted out of the lowest income bands, and has even begun to close the gap on average incomes received by the working population.
“While this is positive news, we must be careful of complacency. A rising state pension age, the recent threat to the triple lock, and slow demise of ‘gold plated’ pensions, means that this golden age of retirement is unlikely to last for much longer. As an ageing population puts greater pressure on public services the government will look to put its finances on a stable footing, as we’ve seen with recent suggestions for social care reform. Ultimately, we’re likely to see yet further individual responsibility given to people, to support themselves in their old age.
“Anyone who wants to ensure that they have sufficient income for a comfortable retirement and the means to supplement social care costs in old age should consider talking with a financial adviser to review both their workplace and private pension provision. For younger generations the message is clear - get into the savings habit as early as possible in your career.”
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