The gap between the incomes of pensioners and workers has narrowed substantially over the last 20 years, according to the Office for National Statistics (ONS).
In 1994/95 pensioners typically lived on an income that was 38% less than the typical worker, but by 2014/15 this gap had reduced to just 7%.
Commenting on the findings, Royal London said that many new pensioners had reached the ‘golden age of retirement’ – with the average weekly income of a retiree under the age of 75 reaching £348 a week, almost £100 more than those aged 75 or over. However, even those in the older age group have seen their incomes rise substantially – up by 92% in 20 years. This was compared to an increase in the average worker’s income of just 28%.
Fiona Tait, pensions specialist for Royal London says that the increase was partly due to more younger retirees continuing to work in some way.
“The significant increase in weekly income is great news for those in retirement,” she says. “But looking at the main differences in the source of income for those under and over 75, there are clearly two key elements.”
“A smaller percentage of the income for those under 75 is being sourced from state benefits, (35% compared with 55%). By contrast, income from earnings represents nearly a quarter of the income (24%) for those under 75 compared with just 3% for the older age group.”
However, Tom McPhail, head of retirement policy at Hargreaves Lansdown attributed the increases to state pension provision and warned that the findings could exacerbate issues of intergenerational fairness.
He says: “A key component of pensioners' improving prosperity has been the state pension, which has increased from an average of £133 a week in 2004/05 to £161 a week in 2014/15. The continued use of the triple lock may come under increasing pressure, if only to refocus state pension resources on the over 75s who have the greater need.”