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
    -11

    Comment number 300.

    292. anneque2

    "We paid in"

    As the government never saved any of the money you "paid in", who do you think they spent it on instead?

    Yes YOU and your generation.

    Now you want other people to cash the cheques you wrote to yourself years ago but never saved the money to cover.

    How exactly is that fair or not a swindle by YOU?

  • rate this
    +14

    Comment number 299.

    I'm grateful for the system which allowed me to attend a grammar school and thence on to University and into a career for no charge. It was my good fortune to be born when I was, but it was never handed on a proverbial plate. My children are all saddled with student loans to repay. I deplore the system which has allowed this to happen. They really should have had the same advantages as I/we did.

  • rate this
    0

    Comment number 298.

    Live now Cameron is looking quite cuddly on the live BBC News Have your say with questions from around the globe. Polished.

  • rate this
    +2

    Comment number 297.

    288
    \We could get a mortgage based on ONE salary. If you earned £2k, and your wife earned £1k, you could get a mortgage for about £5K at an average of 15% and you'd be looking at a 3 bed semi for about £5K (average price). Today, your mortgage would be around 5.5 x £60k (£330k) - average 3-bed semi costs £150 - 200K and mortgage rate is about 7%

  • rate this
    0

    Comment number 296.

    State pension increases beyond the usual inflationary amounts would make the country bankrupt. We spend £120bn on pensions out of £600bn income, that is something to be proud of. Gov'ment needs to focus on bringing down the cost of living for all. That means no more quantitative easing, getting rid green subsidies on energy, building more houses and increasing personal and family tax allowances.

  • rate this
    -1

    Comment number 295.

    Low wage, high cost economy = not possible. Wages cannot go lower without ramping up the benefits bill. Housing is by far the biggest cost to everyone, owners, renters or tax payer, then a plan to have controlled drop in house prices over, say, 20 years by a couple of % a year would seem to be the only way forward. Yes it will hurt, but hey, it's ok to crucify the disabled, why not everyone else?

  • rate this
    +1

    Comment number 294.

    On 4OD, I watched "Skint". They portrayed a family with 6-7 kids living solely on benefits. The replaced their broken TV with a huge LED 3D TV. The journalist asked, "what do you tell taxpayers seeing you buying this?", to which the father replied: "Stuff em, I gotta wait 2 years to 'pay' this off, I can't get it new like them rich folks."

    The welfare-nanny-state immorally subsidises sloth.

  • rate this
    +3

    Comment number 293.

    In 1966 I bought my house for £4000 with a £3000 mortgage my income was £1000 a year so the average mortgage was 3 times salary with interest rates at around 9%, by todays standard that would equate to aprox £90,000 for the house, so how come its nearer £250,000, I dont gain because to move would cost me as much to buy another but it means that youngsters cant afford to buy.

  • rate this
    +4

    Comment number 292.

    We have the lowest pensions in Western Europe, devalued by the change in uprating from RPI to the lower CPI, abysmally low interest on savings already eroded by inflation, the granny tax on the over-80s,huge increases in food and fuel costs,on which pensioners spend a higher proportion than most. We paid in; now they're going to steal our pensions, the ********

  • rate this
    +1

    Comment number 291.

    No-one is interested in generational war. However, protected by the triple lock, pensioners might consider that they did not face the lifetime of grinding debt (university and/or property purchase) we now think is acceptable for the young to endure. This is the main reason my pensioner parents don't have grandchildren yet.

  • rate this
    0

    Comment number 290.

    Alternative Headline:
    UK bankers' incomes have risen faster than all other economic groups in the last 30 years, my guts tell me.
    So piggin' what?

  • rate this
    0

    Comment number 289.

    This all means that by the time I am old enough to get my pension I will be heavily taxed and punished for the inbalance now. Really looking forward to that!

  • rate this
    -5

    Comment number 288.

    @278 - it isn't the absolute value of property or wages that matter it is the relationship between the 2. Average mortgages now are 5X salary, for the baby boomers it was 2.5X, so the younger generation have to spend a greater proportion of their wages on housing (if they can afford a mortgage) so baby boomers have ahd a great advantage in this area

  • rate this
    +6

    Comment number 287.

    If someone on £30k gets a 1% rise and a pensioner on a £5K state pension gets 2.5%, according to this story the pensioner income is rising faster because they are looking at percentages, not actual values. I would rather have 1% of 30K thank you.

    Lies, damn lies & statistics.

  • rate this
    -24

    Comment number 286.

    Pensioners paid in all their lives but immediately took it all out and spent it on themselves.

    THEIR governments never saved it. They spent it all and more by borrowing and by promising themselves pensions that were never funded.

    Did current pensioners pay for their parents pensions?

    No - their parents had short retirements, but why do they demand their children to do it now?

  • rate this
    +4

    Comment number 285.

    Material expectations are much higher among generation Y today than when I was of a similar age. Everyone wants a car the moment they reach 17. Every new hi-tech gadget is a must-have.Ditto fashion-wear, plus the mandatory two weeks clubbing in Ibiza etc. Such credit-driven consumerism hadn't evolved back then.I recall saving up £350 for a state-of-the-art VCR...more than £1000 in today's money.

  • rate this
    0

    Comment number 284.

    264.
    MTaylor
    and there i was thinking the MP's with their demands for higher wages expenses & that income from lobbying dodgy companies - would be next

    Never happen darling – they just had their own private meeting in Hertfordshire to ensure it doesn’t

    For all those who aren't pensioners yet,what happens next WILL AFFECT YOU SOON

    Doubt it, most of them are too fat & lazy to live that long

  • rate this
    +3

    Comment number 283.

    2012 gave us about £5 = took £3 back
    2013 gave us about £2 = took £1 back
    Average rise 1% = prices up by 20/25% (at least)

  • rate this
    +9

    Comment number 282.

    I work, pay taxes, save for my retirement. I pay a small % of wages into a private pension, as well as my work-place pension. I saved & saved to get a deposit for a mortgage, which will be paid off by the time I retire.

    When I do, I hope that I will be comfortable. This comfort will come from my own planning and my own funds.

    Help pensioners who need it, but don't punish those that don't!

  • rate this
    +2

    Comment number 281.

    205 .. I want to see a universal pension scheme Gov and subscriber combined fully flexible, protected and easily mobile through anyones working life..those who can make an effort to pay more in get rewarded those who cannot will still get the basic GOV pension with any extra they paid in until they stopped.. There are no easy answers but incentive helps!

 

Page 18 of 32

 

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