Pensioners' incomes rising fastest, says IFS

 

The BBC's Simon Gompertz meets the pensioners and young people 'reversing' roles

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.

'Younger' poverty

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."

European comparison

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.

Children playing football Other figures have shown that one in six UK children live in poverty

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."

Poverty figures

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.

 

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  • rate this
    +4

    Comment number 60.

    The headline could have been:

    Pensioners income barely matches inflation

  • rate this
    +1

    Comment number 59.

    "There are lies, damned lies and statistics"

    QED.

  • rate this
    +2

    Comment number 58.

    lies, damned lies and statistics

    you can just about make these figures say anything

    look at it another way pensions rose from the lowest base and it's not the case that they are rising fastes, as the headline states, but they rose fastest, that may not be the case any longer as pensions are hit

  • rate this
    +2

    Comment number 57.

    Please note pensions, whether state or private are taxed just the same as any other income so the bigger the pensioners the tax bill. The only exception, as far as I am aware, is the winter fuel allowance; probably because of the politicians’ fear of the resulting media headlines should they choose to tax it.

  • rate this
    +4

    Comment number 56.

    It is disingenuous to say that if a baby boomer bought a property for £3000 (Twice average salary) 40 years ago and sells it now for £500,000 (Twenty Five Times annual Salary ) that this represents scrimping and saving it is down entirely to good fortune in relation to housing prices.

    This government is making poor pensioners poorer via VAT etc but has excluded rich (Tory Voting) Oldies

  • rate this
    +3

    Comment number 55.

    41.david williams
    Doesn't help when I see cars with "disabled--no road tax payable" on the streets;cars which are a damn sight newer than my 7 year old saloon.
    ------
    It's not like a disabled person can push a car if it breaks down is it?
    Maybe you should be happy to be able bodied and thankful you can run the risk of using a 7 year old car?

  • rate this
    +1

    Comment number 54.

    45.
    jubline


    "Where do reports, such as this one, actually get their data from?"

    Forget the data , its the briefing that counts which in this case was probably to do a survey which confirms the govts feeling that pensioners incomes have risen faster than anyone elses. And do it now before SERPS is scrapped .

  • rate this
    +4

    Comment number 53.

    @43 Black and Proud

    It isn't that the baby-boomers had too much in terms of benefits, it is that the current generation will be getting much less when they retire, which is wrong.

    Nobody wants to live in hardship and poverty, and struggle until they die.

    Lift the bar up, don't lower it. Pensioners should be immune to austerity measures IMO.

    You will be old one day!

  • rate this
    +2

    Comment number 52.

    This is because they came from such a low base to start with. If you look at pensions across Europe UK pensions lag far behind. Why don't these 'experts' give the whole picture. Average state pension in Sweden £25,000 average in UK £7,000. Apart from not having to pay rent owning your own house doesn't help, you still have to live somewhere and the chances are it will be left to your children

  • rate this
    +3

    Comment number 51.

    @9 - Absolutely - a series of windfalls for the benefit of one generation, whereas the disadvantages will be borne by future generations. But I'm not necessarily blaming the beneficiaries; as soon as a house was considered to be an investment or commodity to be traded rather than a roof over your head ("home"), inflated house prices were bound to follow

  • rate this
    0

    Comment number 50.

    Divide and conquer. Immigrants, the unemployed, the elderly...this reminds me of Martin Niemoller's poem 'First they came...'

  • rate this
    0

    Comment number 49.

    For the richer pensioners who have few outgoings yet pay peanuts in tax is the issue - They pay no NICS, they have higher personal allowances, and many benefits. That is the inequality! The basic pension itself should not be reduced, but the benefits for the rich pensioners need to be reviewed.

  • rate this
    +1

    Comment number 48.

    @19 anthonygh "Interest from my saving accounts, which I have been contributing to for decades, doesn't seem to be rising" If you want to save money, don't use cash savings accounts! The rate of interest is rubbish and may be penalised if you withdraw. Use stocks-and-shares ISA allowance instead.

  • rate this
    +2

    Comment number 47.

    Certainly means test winter fuel allowance and free TV licenses etc. These are benefits, so fair enough, like every other benefit, let's see if people need them.

    However, I'm against the idea of extra taxation or extra measures to clobber pensioners' savings, rich or not. That's simply not fair. The wealthy have got their by legal means and shouldn't be penalised in the autumn of their years.

  • rate this
    +4

    Comment number 46.

    through my grandparents i met many well-off pensioners. they only worked average jobs but had access to many schemes which came to fruition later in life. young people just dont get the same deal, or cant afford it. when i reach their age i bet i will not be able to casually shop in M&S. our futures have been robbed already and the government are hellbent on taking whatever is left for us. sick.

  • rate this
    +3

    Comment number 45.

    Where do reports, such as this one, actually get their data from? Is this just a random cross-section of society? How can we possibly know that what this report is telling us is true?

  • rate this
    -14

    Comment number 44.

    At the Same time official DWP figures show that absolute poverty among children rose by 300,000, with two-thirds of those living in households with one or more earner since 2010

    The reason why this government has chosen to exclude the wealthy retired baby boomer's while targeting the poorest and most vulnerable with cuts is simple the Old vote and they tend to vote Tory.

  • rate this
    -37

    Comment number 43.

    As usual, the pensioners claim that they paid in all their lives.

    Wrong.

    Some paid in for some of their lives.

    They also got a load of other benefits (student grants, Mortgage interest tax relief, free dental care) that I, and their children, will never get.

    The generation that had it all, then stole from their grandchildren.

  • rate this
    +1

    Comment number 42.

    Number 18; give it a go and see how far you get.

  • rate this
    +1

    Comment number 41.

    Where do these headlines come from?
    For sure--my pension [state and company} are not rising quickly at all!
    I wish my income was rising as fast as my bills were.
    Doesn't help when I see cars with "disabled--no road tax payable" on the streets;cars which are a damn sight newer than my 7 year old saloon.

 

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