Income gap between the wealthiest and poorest pensioners is growing
The members of Britain’s baby boomer generation who are now entering retirement have been called ‘the richest generation in history’. But the income gap between the wealthiest and poorest pensioners is growing, with those in the top pension income band now having an average weekly income of almost £1,000.
Government figures on pensioner wealth show that the average weekly income for the wealthiest pensioners has grown faster over the past ten years than those in the lowest income group.
Sources of pensioners’ income The richest 20% of pensioners, equivalent to 840,000 couples, now have an average net income (after Income Tax, National Insurance and Council Tax) of £988 per week. This equates to an annual income of £51,376. These government figures include all sources of pensioners’ income such as pensions, investments, earnings and benefit income.
These wealthy ‘pensioners’ have seen their weekly income increase by 15% over the last decade – from £858 to £988. In contrast, the poorest 20% have seen a lower 14% increase from £234 to £267 for the same period. This means the current difference between the income of the top and bottom 20% of pensioner couples has risen by almost £100 from £624 to £721 per week.
Highest income distribution band Over the last ten years, pensioner couples in the highest income distribution band have seen their average weekly income increase to £988 a week. This large proportion of retired couples can legitimately consider themselves ‘pensioner millionaires’. In fact, while many people may assume their house is their most valuable asset, for many it could actually be their pension.
Reaching the State Pension age However, the figures also show the bottom fifth have an average weekly income over £700 less at just £267 per week per couple, or £134 per individual, which is substantially under the full rate of the new State Pension, currently £168.60 per week.
Many of these pensioners may have reached State Pension age before 5 April 2016 and be receiving the ‘old’ State Pension or have had insufficient National Insurance records to qualify for the full rate.
Source data: Department of Work and Pensions Financial year 2017/18, 28 March 2019 – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/822623/pensioners-incomes-series-2017-18-report.pdf
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