Retirees are richest ever, thanks to pensions and boom in housing
BRITAIN’S pensioners are the wealthiest they have ever been with more than half of them now in the top income bracket, figures today reveal.
Generous final salary pensions, more retirees continuing to work, higher benefits and home ownership mean that current retirees are more financially secure.
Over the past decade the typical pensioner has seen average income jump 18 per cent to £307 per week – £15,964 a year – compared with £260 in 2006/07.
The Department for Work and Pension figures put 51 per cent of pensioners in the top of half of the population by overall income, a massive rise on the 39 per cent in that bracket in 1996/97.
But the good times are not likely to roll on indefinitely with younger generations not likely to be so fortunate, retirement specialists warn.
The closing down of goldplated defined benefit pensions and their replacement with cheaper defined contribution schemes, which sees the saver take all the risk, alongside the halting of the “triple lock” state pension guarantee, will drag retirement incomes down.
David Burrowes, chairman of the Equity Release Council, said: “While pensioners’ income is on the rise, an overreliance on private pensions could increasingly lead to a retirement income shortfall in the future.
“Pensioners will see the value of their pensions fall due to the shift from generous final salary schemes to defined contribution schemes, and as people are living longer, millions of workers will face severe reductions in income when they retire. Against this backdrop and alongside considerable growth in house prices, property will increasingly become many pensioners’ most valuable asset. “
Total homeowner equity in England reached £2.6trillion in 2016, of which £1.8trillion belonged to households with a homeowner aged 55 years old or over.
Jon Greer, head of retirement policy at Old Mutual Wealth, said: “Pensioners of today are more secure in retirement, particularly younger pensioners. But today’s numbers bring into harsh reality how precarious the situation is and how the generations of tomorrow may not be so fortunate.
“Part of this is because pensioners have saved more and are benefiting from occupational pension schemes. However it’s also down to owning their own home, something 74 per cent of those aged 65-plus do.”