Resolution Foundation: typical pensioner £20 a week better off than working age households
A report from the Resolution Foundation think tank has found typical pensioner households are now £20 a week better off than typical working age households are after housing costs.
While home ownership has increased and older people are in work, it states the biggest reason for the growth in wealth is occupational pensions. The report said occupational pensions account for over a third of gross pensioner income growth since 2001.
The triple lock is described as an especially major driver of improvements at the lower end of the pensioner income scale, on the state pension.
Will the triple lock last?
Commenting on the Resolution Foundation’s report ‘As Time Goes By’ Malcolm McLean, senior consultant at Barnett Waddingham, said:
“Concerns about intergenerational unfairness as well as the cost to public finances of maintaining the triple lock have been voiced more loudly over the last few years.
“This report adds further grist to the mill for those who would like to see an end to the triple lock and its replacement by either the increases in inflation or average earnings growth as soon as possible.
“The present government is committed to keep the triple lock until at least 2020. Whether or not they are prepared to end it there is as much a political question as an economic one.
“Were the government to do so, it would undoubtedly be unpopular with many in the current pensioner population and could tilt the scales in favour of its retention for a further 5 years - until 2025.
“In my view the government has to come off the fence on this issue before 2020 and make a decision on which way it wishes to go. If, as seems at this point to be the case, it feels assured of having a majority at the next election, it should probably grasp the nettle and dispense with the triple lock in favour of a link to average earnings rises.
“As with many things at the moment, much will depend on how the economy shapes up over the next few years in the light of Brexit and other uncertainties.”
A moment in the sun
Mike Morrison, pension expert at AJ Bell, adds: “Financial and social trends can be the result of actions years ago and I think that the research today from the Resolution Foundation is a good example.
“The headline findings suggest that the average income of pensioners is, for the first time, higher than the average income of those families still working. However, this is not across the board and there are many pensioners for whom austerity and just managing are the reality of life.
“Those at the top, from that baby boomer generation have been lucky with several key trends going their way. They are the last generation to benefit from generous final salary pension schemes, the generation that got the most out of the housing boom and the generation that did not leave higher education with debt.
“They are enjoying a moment in the sun, often literally, that future generations simply won’t have unless they secure their own retirement income through individual pension planning.”