Leading industry figures have warned against “complacency” over pension provision despite new figures showing that the average income of retired households has almost tripled over the past 40 years.
The Office for National Statistics has released data showing that, accounting for inflation and different house sizes, average annual gross income for retirees has shot up from around £10,000 in the mid 1970s to nearly £30,000 today.
Average weekly disposable incomes have risen more than fivefold, even for those without a private pension, as the state pension nearly doubled over the period, but private pension income is also around seven times higher today.
For the 79 per cent of retired households with private pension income in 2016, the ONS says they had a 1.6 times greater disposable income that those without private pensions.
However, future pension entitlements will be less certain, industry experts warn.
Aegon pensions director Stephen Cameron says: “Pensioners in the UK have never been better off financially than they are today. In the last 40 years, the average pensioner has catapulted out of the lowest income bands, and has even begun to close the gap on average incomes received by the working population.
“While this is positive news, we must be careful of complacency. A rising state pension age, the recent threat to the triple lock, and slow demise of ‘gold plated’ pensions, means that this golden age of retirement is unlikely to last for much longer.”
Former pensions minister and Royal London policy director Steve Webb says: “In previous generations being elderly was a by-word for being poor. That has changed dramatically in the last forty years with pensioner incomes nearly trebling whilst the incomes of the work age population rose much more slowly.
“The big danger is that we are living off former glories. The big growth in pensioner incomes is driven by people retiring with good company pensions. But today’s workers are not building up pensions that are anywhere near as generous. Whilst pensioner poverty rates have dropped sharply this could go into reverse if today’s workers do not build up their own pensions at a much faster rate than they are at present.”