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Home Finance Pensioner incomes on the rise but is everyone getting what they are owed?

Pensioner incomes on the rise but is everyone getting what they are owed?

by Uma
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  • In 2021, pensioners had an average income of £361 after housing costs, an increase from £333 in FYE 2020.
  • Younger pensioners tended to have higher incomes than those aged over 75. This is due to higher occupational pensions and the fact that younger pensioners were more likely to be in work or live with someone who still worked.
  • 20% of pensioners were in receipt of income related benefits in 2021. In 1995 it was 37%
  • On average, pensioner couple incomes were lowest in Yorkshire and the Humber, where incomes were 9% below the UK average. Pensioner couples in the South East had the highest average income, 14% higher than the UK average.
  • In terms of income distribution for the whole population14% of pensioners were in the bottom fifth down from 19% in 1995.
  • 20% of pensioners were in the top fifth of income distribution- up from 13% in 1995

The Department for Work and Pensions has released the latest Pensioner Income Series data Pensioners’ Incomes Series: financial year 2020 to 2021 – GOV.UK (www.gov.uk)

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

This is a bumper pay increase for pensioners, rewarded for careful saving all their working lives. But the overall figures mask some major differences in incomes, and there are still enormous numbers of pensioners having to get by on less.

This data shows an improving picture for pensioners with average incomes continuing on an upward trend largely boosted by occupational pensions and improved state pensions. It also shows the shifting picture of retirement with the higher incomes of younger pensioners being boosted by earnings income as many people choose to continue to work for longer, even if only on a part-time basis.

However, gaps remain. Single women in particular are more likely to be reliant on benefits income – notably the state pension which makes up a large part of their income. However, auto-enrolment will mean increasing numbers get to retirement with some occupational pension income in future.

We’ve also seen a huge decrease in the numbers claiming income related benefits. While this is a sign of improved pensioner incomes which is a huge positive, we should also be alert to the numbers of people not claiming what they are owed and suffering financially as a result. We know that benefits such as Pension Credit remain hugely underclaimed and more work needs to be done to make sure those who are entitled claim what they are owed.”