Widening gap in pensioner income is highlighted

THE RETIREMENT income gap between households with a private pension income and those without is growing, according to Office for National Statistics (ONS) figures.

By 2016, retired households receiving a private pension had disposable incomes that were around 1.6 times higher than households that were not.

Between 1977 and the financial year ending 2016, the disposable income of retired households increased at an average annual rate of 2.8 per cent after accounting for inflation and changes to household composition, the ONS said.

This compares with average annual growth in non-retired households of 2.1 per cent.

The average disposable income of households with private pension income has grown from £2,300 in 1977 to £27,800 in 2016.

Meanwhile, the average income of households without private pension income has increased from £1,700 to £17,200 over the same period.

In the financial year ending 2016, those with a private pension had average original incomes which were around 14 times higher than those who did not receive any private pension income – at £19,000 compared with £1,300 respectively.

Original income is money which does not come from government intervention. It does include money earned from employment and investments. The ONS said that 40 years ago, in 1977, just over a fifth of retired households had an annual disposable income of over £10,000, after accounting for inflation and household composition. But by 2016, this had surged to 96 per cent of retired households.