The retirement wealth gap

The gulf between rich and poor pensioners is wider than ever

THE richest retirees have more than five times the disposable income of the poorest - and the gap is widening.

Disposable income is what a household has left to spend after any taxes are deducted.

Figures from the Office for National Statistics have revealed that the most affluent 10% of retired households in the country have an average disposable income of £57,316 a year.

That compares to an average disposable income of £11,144 for the most deprived 10% of retired families. It means the wealthiest in the country have an income that is 5.1 times as high as the least wealthy - the biggest gap seen since the 90s.

The divide has only been wider once, in 1990, when the richest had 5.2 times the income of the poorest, and compares to a low of 3.1 times as much in 1978.

While the average disposable income of the most affluent retirees has generally increased year on year, that of the most deprived is much more prone to fluctuation.

The average disposable income of the most deprived 10% fell from £11,879 in 2016/17 to £11,144 in 2017/18 - the most recent figures available.

Meanwhile, the average income of the least deprived 10% increased from £56,124 to £57,316.

The income gap at retirement is driven by existing inequalities at a younger age when it comes to the distribution of wealth.

Those who have more to begin with whether that’s through inheritance or higher salaries - are better able to prepare for their retirement.

They’re more likely to be able to get on the property ladder and make other long-term financial investments, and on a more basic level are able to put more aside for their retirement pot.

Dr Wanda Wyporska, executive director of The Equality Trust, said: “From the cradle to the grave, we see inequality destroy lives.

“Poorer people are more likely to see their babies die and now we see a huge gap between rich and poor pensioners.

“In equal pay month, let’s remember that lower pay for women translates into lower pensions and many pensioners are forced to work until they drop.

“Is this really the life we want for our parents and grandparents? “We also know that due to lower life expectancy in poorer communities, many will not even live to collect the pensions they have paid into.

“Whoever forms the next government needs to introduce a plan to reduce inequality across all departments as a matter of urgency.”