British pensioners are, on average, better off than their working counterparts, new research has found.
According to a report by the Resolution Foundation think tank, pensioners households in the UK are on average £20 better off than working age households, having been £70 worse off 16 years ago. The As Time Goes By report found the average pensioner income has risen 30% in the period, although the typical income of someone who turned 65 in 2001 was only 7% higher by 2014.
Possession of occupational pensions, higher state benefits, a shift from renting to home ownership and increased employment were the main driving factors behind the change in pattern.
The report added the shift has also been exacerbated by an environment that has seen higher income for pensioners coincide with weak wage growth for workers.
“The main driver of pensioner income growth has been the arrival of successive new waves of pensioners, who are more likely to work, own their home and have generous private pension wealth than any previous generation,” said Adam Corlett, economic analyst at the Resolution Foundation.
“Of course, not all pensioners can draw on these income sources, which is why the state pension will always be the main income for many pensioners.”
Corlett, however, added that the current trend might not be sustained in the future. “We can’t assume either that young people today will be able to draw upon the kind of wealth that recent pensioners have accumulated, given the recent fall in home ownership and decline in generous defined benefit schemes,” he said.
Former Conservative MP Lord David Willetts, now an executive chair of the Resolution Foundation, urged the government to review the “triple-lock” pension arrangement.
The policy, which has been implemented by successive governments, ensures pensions rise by the same as average earnings, inflation, or 2.5%, whichever is the highest.
“Of course there has to be some kind of framework for increasing the state pension,” he told BBC Radio 4’s Today Programme.
“But the [triple-lock] is a very powerful ratchet pushing up pensions at a time when incomes of the less affluent half of working households are barely rising at all.
“I actually think pensioners worry about their kids and grandchildren. They don’t want to live in a society where all the big increases in incomes are accruing to pensioners and other groups are being left behind.”