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Private pensions have widened rich-poor gap

Private pension provision has boosted the income of the wealthiest

fifth of UK pensioners to more than three times that of the poorest

20 per cent, a new survey reveals.

Research from the Pensions Policy Institute reveals that the richest

20 per cent of UK pensioners now have an average pension income of

£19,000 a year – 87 per cent of national earnings – with the

poorest fifth on £4,600 – 21 per cent of average national

earnings.

But the report concludes there is no evidence that future pensioners

will be any better off than today&#39s, with both the state and

employers cutting their long-term commitments and no evidence that

people are making up for this through their own pension or other

savings.

The research shows average contributions to non-state pensions grew

as a proportion of average earnings to 7.8 per cent in 2000 from 6.5

per cent in 1997 but fell back to 7.7 per cent in 2001.

The PPI says the growth in people eligible for means-tested benefits

means the interface between private and state provision should be

overhauled.

PPI director and co-author of the report Alison O&#39Connell says: “The

danger is most people with moderate second pensions will be on

means-tested benefits in the future. This makes it difficult for

people to save and know they are getting value in the future.”

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