Pensions

Retired household income up 14.9% since 2008

Malcolm McLean said the figures ‘undoubtedly’ reflect good pension entitlements

Retirees have seen their disposable income grow by around £3,000 since the end of the 2008 financial year, latest data reveals.

Provisional figures from the Office for National Statistics (ONS) suggest the median disposable income for retired households was £22,400 at the end of the 2016/17 financial year, compared to £19,500 in April 2008. This equates to a 14.9% increase.

The figure is also up since last year, when the median income was £22,000.

In contrast, non-retired households have seen just a marginal increase in their disposable income, with a median improvement of just £76, from £29,213 in 2008 to £29,289 this year. However, this figure is up from £28,860 last year.

The data has been adjusted to take into account inflation, using the consumer price index plus owner occupiers’ housing costs (CPIH).

Barnett Waddingham senior consultant Malcolm McLean said the figures “undoubtedly” reflect the current retirees’ access to good quality private pensions and the triple lock on the state pension.

He added, however, that although non-retired households had more disposable income, the lack of movement on this since the financial crisis boosted the need for increasing contributions and engaging more workers through auto-enrolment.

“The picture for non-retired households is much less encouraging,” he said. “While their median income is still higher than retired households, the figures suggest that the impact of the financial crash had a marked adverse effect on them – from which they have still yet to recover.

“This makes it more 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 going to catch up with, or at least match, those of today, there can be no room for complacency in addressing these issues.”

If using the mean figures, retired households’ disposable income grew from around £22,000 to £26,300 since 2008, while non-retired households edged downwards from £34,600 to £34,400.

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