Tuesday, 8 August 2017

Pension jackpot for many baby boomers, official statistics show

Older people's income has received a massive boost from private and workplace pensions in the last 40 years, official statistics show.

In 1977, only 45% of retired households received income from a private pension, compared with 80% last year, the Office for National Statistics (ONS) said.

As a result, the income gap between those only getting the state pension and other pensioners had grown.

Overall, incomes have grown faster for older people than for the young.

The disposable income of retired households grew at 2.8% a year since 1977 after accounting for the rising cost of living and changes to household composition, compared with growth of 2.1% in non-retired households.

Much of the recent debate over a generational divide has centred on the future of the state pension and the fairness of its "triple-lock" guarantee of annual rises. This ensures an increase in line with earnings, inflation, or 2.5%.

This report by the ONS instead puts a spotlight on the effect of other forms of pension for household incomes, particularly revealing the benefits of final-salary pensions.

Excluding the state pension, it shows that those with a private pension had average pre-tax income (also including wages and investment returns) of £19,000, which is 14 times higher than those who did not receive any private or workplace pension income.

Adding the state pension and the effect of taxation cuts the gap. However, the disposable income of retired households with a private pension in 2016 was still £27,800 - higher than the £17,200 of those without a private pension.

BBC      News.