Private pension schemes see pensioner’s riches soar

News


09 Aug, 2017

Private pension schemes see pensioner’s riches soar

Today’s pensioners are the richest ever, with retirement incomes that rival working households incomes, official data revealed.

Older people’s wealth has climbed over the past 40 years, with a sevenfold increase in private pension income, according to the Office for National Statistics (ONS).

The figures show that someone on a private pension fund last year was found to have an average weekly disposable income of £534.75. In comparison, the average weekly salary for today’s workers in the UK sits at a typical £473 before tax.

The numbers show people now at retirement age have benefited from gold-plated pension funds in particular, according to experts.

The ONS figures showed that the 1977 figure where one in five homes had the equivalent of £10,000 of disposable income a year now increased to more than nine in ten. Half of the increase of income in retired homes over the past four decades can be largely attributed to increased private pension income, according to the ONS.

Head of pensions at Close Brothers Asset Management, David Newman, said: "Pensioners have never had it so good.
 
"Gold-plated final salary pensions have been instrumental in boosting incomes over the past forty years, while the income provided by the State Pension has doubled over the period, with the triple lock maintaining growth more recently.

"But as life expectancies rise, the financial burden for the State becomes unsustainable, and the most lucrative defined benefit pension schemes become a thing of the past, the question is: what next for younger generations?"

Pensions director at Aegon, Steven Cameron, added: “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."

This growth has been largely driven by private sector pensions as opposed to state pensions, which have been sluggish in comparison. Despite the the increase in disposable income, those who have a private pension have benefitted more than those who do not.

In fact, someone without a private pension has a disposable income of £331.33 a week - £200 less than those with. Last year, retired households with a private pension had disposable income that is around 1.6 times higher than those who do not, the ONS data showed.

Experts said it showed that savers must take responsibility to build a decent, sustainable retirement pot. Senior analyst at AJ Bell, Tom Selby said: “These latest official statistics are a stark reminder of the impact failing to save for retirement can have.”

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