A fifth of UK retired couples are “pensioner millionaires” as the gap with the poorest pensioners widens, according to a study by Aegon.
Analysis of government figures by the pension and investment firm has found there are 840,000 retired couples in the UK who have a weekly income which would cost more than £1.15m if bought as an annuity.
The couples in the top pensioner income band have an average weekly income of £988. The figure for the wealthiest pensioner couples has grown faster over the last ten years than for the poorest pensioner couples, widening the gap between the two groups.
The richest have seen their incomes increase by 15 per cent over the last ten years from £858 to £988, while the poorest have seen a 14 per cent increase from £234 to £267 for the same period. This means the current difference between the income of the top and bottom 20 per cent of pensioner couples has risen by almost £100 from £624 to £721 per week, according to Aegon.
Aegon pensions director Steven Cameron says: “Over the last ten years, pensioner couples in the highest income distribution band have seen their average weekly income increase by 15 per cent to £988. A weekly income of this size would cost £1,152,250 to buy through an annuity which means this large proportion of retired couples can legitimately consider themselves ‘pensioner millionaires’.
“In fact while many people may assume their house is their most valuable asset, for many it could actually be their pension.”
He adds: “However, whilst the top fifth of pensioner couples have seen their income rise to £988 per week, the figures show the bottom fifth have an average weekly income over £700 less at just £267 per week per couple, or £134 per individual, which is substantially under the full rate of the new state pension, currently £168.60 per week.
“Many of these pensioners may have reached state pension age before 5 April 2016 and be receiving the ‘old’ state pension or have had insufficient National Insurance records to qualify for the full rate.”
Pensioner couples are defined as married or cohabiting pensioners where one or both are over state pension age.
Aegon’s analysis is based on government figures for 2017 to 2018, which included all sources of pensioners’ income such as pensions, investments, earnings and benefit income.
Research from financial technology firm Wealth Wizards, published at the start of this month, revealed that around 40 per cent of workers are “not interested” in their pensions or had failed to pay in.