Pensioner incomes on the rise

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Pension income illustrated by female and male retirees eating breakfast

Financial planning in association with Scottish Widows bannerPensioner incomes are on the rise, with a new government report finding that today’s retirees are considerably better off than those who finished work a decade ago

Average pensioner incomes climbed by around 14 per cent in the decade leading up to 2015/16, according to new analysis from the Department for Work and Pensions.

Once expenses such as direct taxes, pension contributions and housing costs were taken into account, the average pensioner income was calculated at £296 per week, up from £258 in 2005/06.

The report also revealed a higher occupational income among single men, particularly those under 75, who received higher average incomes (£224 per week) than their female counterparts (£203 per week).

Quoting figures before the deduction of expenses, Malcolm McLean, a senior consultant at London based financial planner Barnett Waddingham, said: “Recently retired pensioners have significantly higher weekly average incomes than those who retired in 2005/06 – £357 compared to £314.

“In 2015/16, 41 per cent of pensioners received more than 50 per cent of their gross income from private sources and more pensioners are now at the top of the income distribution rather than the bottom.

“This undoubtedly reflects the benefits of private pension saving and the opportunities that regular employment and the existence of good quality final salary schemes have provided to date for the fortunate generation involved.

“The big question is, will this trend continue or go into reverse? Especially with the demise of defined benefit provision, at least in the private sector, less secure employment and other economic pressures and uncertainties facing the country at the present time.

“The future of the triple lock on the state pension is another factor which could impact on pensioner incomes in the years ahead.”

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