New research published by the Resolution Foundation has found that pensioners are now £20 a week better off than working households. The report has been called As Time Goes By and shows a reversal of the situation from 15 years ago.
Back in 2001, households relying on pensions were £70 a week less well off than working households.
The thinktank pointed out that this was not true of all pensioners as the results included those with an occupational pension, home owners and also those who were still earning money in the household.
Reasons for Growth
Over a third of pension increases were linked to occupational pensions. Pensioner benefits have risen by 8% since 2001, which accounts for another quarter of income growth.
Those households relying on a pension in which one person also works have increased to almost one in five, raising the average income of households with a pension.
Economic analyst at the Resolution Foundation, Adam Corlett said that: “One of the most intriguing aspects of the recent living standards story across Britain has been typical pensioner household incomes overtaking working-age households for the first time.
“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.”
There also appears to be a clear divide among pensioners’ wealth. The top fifth of households for pension income accounted for 74% of employment income, 52% of occupational income and 66% of investment income. On the other side, the poorest fifth relied almost entirely on benefit income.
Future of pensions
The report highlighted that getting rid of occupational pension schemes could mean that younger people will miss out on the same benefits as today’s pensioners.
The state pension age is on the rise, it will hit 66 between 2018 and 2020 and is expected to rise further to 67 in 2026 and 68 in 2044 and 2046. This means that as well as missing out on the occupational pension, younger people will have to wait longer to get what their state pension.
Lord David Willetts, executive chair of the Resolution Foundation said that the government needs to review younger people’s “pension rights” and chances of home ownership to ensure that they don’t end up missing out on the same benefits that today’s pensioners have.
He said: “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.”
What do you think about this new report? Are you worrying about missing out on the same benefits that current pensions offer? Let us know your thoughts in the comments.