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07

Pensioner income growth outstrips inflation

Open-access content Thursday 3rd July 2014 — updated 5.13pm, Wednesday 29th April 2020

Average gross pensioner incomes grew to £477 a week in 2012/13, beating inflation, for the first time in three years, according to official statistics published today.

2

The Department for Work and Pensions cited the 'triple lock' on the state pension and older people choosing to stay in work as reasons behind the income rise. 

Over the past 14 years, average net incomes for pensioners grew by 37% in real terms, the department said.

In 2012/13, the basic state pension grew by 5.2% and pension credit by 3.9%, compared with the 3.1% increase in retail price index (RPI) inflation.

Commenting on the figures, pensions minister Steve Webb said: 'The triple lock has marked a profound shift in how the state supports pensioners and it means that 12.7 million people will be over £400 a year better off by the end of this parliament.

'Alongside the guarantee of a strong state pension, we are also seeing more older people choose to phase their retirement in a way which suits them. This government's historic decision to end the discrimination of the mandatory retirement age has made that possible for thousands of people.'

Apart from state benefits, DWP said growth was made up of occupational pensions (27%), earnings (17%), investment income (7%) and personal pensions (44%).

Tom McPhail, head of pension research at Hargreaves Lansdown, said that the fastest growing sources of pensioner incomes were employment and personal pensions.

He said: '[This reflects] the new reality that increasing numbers are working on past pension age and that they will be increasingly reliant on money purchase pensions rather than the old final salary schemes.

'It is also notable that male pensioner incomes are still £60 a week higher than female pensioner incomes.

'Finally it is striking that pensioner incomes are rising considerably faster than incomes of the population as a whole; up 37% compared to 12%.'


This article appeared in our July 2014 issue of The Actuary .
Click here to view this issue

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