Pensioners' incomes rising fastest, says IFS
- 14 June 2013
- From the section Business
UK pensioners' incomes have risen faster than all other age groups in the last 30 years, a study has shown.
The study from the Institute for Fiscal Studies (IFS) described the trend as "a triumph of social policy", arguing that poverty in old age was being reduced.
The research also found that the over-60s are the only age group to have become better off since 2007/08.
The findings may fuel the debate over how much protection pensioners should be given from austerity measures.
The IFS said while older people had become richer on average since the beginning of the financial crisis in 2007/08, younger people had become poorer.
The median - or middle - income of the over 60s grew by 2-3% between 2007/08 and 2011/12, continuing a long-term trend, it said.
This was primarily the result of the stability of benefits such as the state pension.
Yet, the median income of people in their 20s fell by 12% over the same period, allowing for inflation. This was the largest fall of any age group, owing to low or frozen wages and high unemployment.
"The face of poverty has become much younger during recent decades," said David Phillips, a senior research economist at the IFS.
"It is young people who have suffered most as a result of the recent recession and who are now at risk of falling further behind.
"It is important that policymakers and politicians understand these profound changes to patterns of low incomes and respond accordingly."
In the early 1960s and early 1970s, the pensioner poverty rate was much higher than for working-age adults.
But the gap has now shrunk significantly, with many pensioners also benefiting financially from owning their own home.
But while the IFS report suggested that pensioner incomes had risen in contrast to others, it did not say that they had become wealthy.
Pensioners were still more likely to be found in the poorer half of the population, the IFS said.
Previous research by the OECD showed that pension income is much lower in the UK than a large number of other developed nations.
Official statistics recently ranked the UK as fourth out of 27 European countries in terms of risk of the over-65s ending up in poverty.
Some pensioner benefits are aimed at assisting people to heat their home in winter. Yet, there are 2.25 million older households in fuel poverty - the equivalent of four million pensioners.
Charity Age UK said older people were more likely than other age groups to be affected by fuel poverty because of their low, fixed incomes and poorly insulated homes.
However, a spokesman for the Department for Work and Pensions (DWP) said: "This government restored the link to earnings on the state pension, and went further to introduce the triple lock, and protect a group that is less able to boost their incomes through work.
"These [IFS] statistics show that progress has been made, and the value of the basic state pension is its highest relative to earnings for 20 years."
But Michelle Mitchell, Age UK's charity director general, said: "While it is true that some older people have seen their incomes rise in recent years, there are still huge inequalities prevalent within the older generation as well as the general population as a whole."
The IFS report, which was funded by the Joseph Rowntree Foundation, goes on to say that working-age adults without children are now as likely to be poor as the rest of the population.
This was the result of an increase in households where no adult is in work, as well as a fall in the relative value of out-of-work benefits.
The figures come a day after figures from the DWP showed that at least one out of every six children in the UK live in relative poverty.
In 2011/12, 2.3 million UK children (17%) lived in homes with substantially lower than average incomes.
The government said it was focussed on getting children out of poverty by getting more people into work.