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
    -1

    Comment number 320.

    Damn good job as well !

  • rate this
    +9

    Comment number 319.

    Whilst there is a lack of detail in the IFS press release, I suspect that this piece of disinformation ignores the disastrous impact on interest rates on savings, on annuity rates, etc of Posh Osborne's policies
    Anyone reliant on such things for any significant part of their income, as is the case with many pensioners, has been hammered

  • rate this
    -7

    Comment number 318.

    299.Proud Welshman
    I'm grateful for the system allowing me to attend... University for no charge
    =
    I'm glad I paid for you to attend an institution I didn't.
    I'm glad many of your classmates will never repay their student loans.
    I'm glad that with these guaranteed loans, Universities can charge whatever they like, as "cost" is not a worry. As you say, "it's free".
    Nothing is free.

  • rate this
    +5

    Comment number 317.

    I am a pensioner on state pension living alone. I do not go to bingo drink have holidays or even meals out. We are not all having an easy life. I went through poverty when young. coats on bed etc. Ended up in homes because we were starving. I worked 46 years doing anthing toilets etc I have seen vacancies here but nobody will take the work. I'm still going without wish I could take them

  • rate this
    +7

    Comment number 316.

    I'm saddened to see the rise in generational alongside worker/non-worker divisions.

    It appears HM Gov propoganda machine, aided & abetted by the media is working well.

    It suits their purpose to pit one group against the other: we then forget to look at what their policies do to all of us.

    I'm glad pensioner poverty is reducing but sad that it's getting far worse for younger generations.

  • rate this
    +1

    Comment number 315.

    @300 Mark from Manchester. Well you sue the government for stealing from us, we shouted about it plenty. Remember they are MY contributions nothing to do with anyone else, so I have paid for my pension. My dad left mam a small private pension, when she gets that and her state pension she pays tax and she is 95 this year. Now lives in a home is left with £25 per month when they take her money.

  • Comment number 314.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +4

    Comment number 313.

    Surely it is clear that this article attacking pensioners again and referencing the young next to them is just more pyschops , pitting the old against the young.

    A continuation of class war.

    People of UK,stay together, young and old respect each other,

    the real enemy is Government and media spreading hate and fear in their NWO agenda..

  • rate this
    +5

    Comment number 312.

    I was always told "Charity begins at home" therefore the first thing we should scrap is Foreign Aid and the associated political empires that support it!

  • rate this
    +5

    Comment number 311.

    "Sally
    Since we left the Gold Standard, the £ has lost 99% of value"

    That's terrible. And living standards were so much greater back in 1931 weren't they? I mean the consumer electronics at their disposal then were so much superior, the foreign holidays they went on so much more exotic, the quality and choice of food, life expectancy etc truly wonderful back then, weren't they?

  • rate this
    +6

    Comment number 310.

    I don't think wealthy pensioners want benefits.The political classes seem totally unable to discriminate between the wealthy and the needy when it comes to the Welfare State. But nor do I want people who choose not to to criticise me and others because we saved hard for our pensions all of our lives when so many younger people today feel the State hasn't the right to expect them to do the same.

  • rate this
    +1

    Comment number 309.

    #1.Black_And_Proud. The precisely how the system should we and it should work for you but won’t, why?
    Like benefits I have no problem supporting those who have fallen on hard times through illness etc but what is happening is we are paying for political failure. The current pensioners will be the last generation to have a general wealth in this country but dont blame us blame the politicians.

  • Comment number 308.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    -8

    Comment number 307.

    Pensioners are rich on the back of inflated property values, but this does not necessarily translate into income. So it seems that the pensioners have been doing better because the tax payer has been paying out. This is a double whammy for the tax payer as the pensioners have being living longer too. I know pensioners will argue they paid in, but my guess is this was not enough given the longevity

  • rate this
    +4

    Comment number 306.

    "298.purple

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

    So he should be, what with the questions being vetted in advance. It's just a staged PR stunt - utterly meaningless.

  • rate this
    +2

    Comment number 305.

    291.GreatClunkingFist
    Thats a pretty big assumption. Many will never pay off that debt, some because they take the skills, paid for by those pensioners mentioned, abroad, some because they dont earn enough, some via declaring bankrupcy (if it covers student loans). House prices will fall as long as we restrain pop numbers. Living costs are the wild card - too many calls on finite resources.....

  • rate this
    +3

    Comment number 304.

    More of the foul divisive propaganda peddled by a government that will do literally anything to avoid meeting its duty of care to the citizens who employ it, preferring to squander our money on vanity projects, illegal wars and personal gain than spend it on the sole purpose for which it is handed over: providing services & support for citizens.

  • rate this
    +18

    Comment number 303.

    As their savings are being eroded (wiped out) by inflation, pensioners are increasingly dependent on the pension. Since we left the Gold Standard, the £ has lost 99% of value.

    Artificially suppressing interest rates to re-inflating a housing bubble penalises savers, esp pensioners. Dependency upon benefits makes you a slave, a political football to be kicked. You are not independent, nor free.

  • rate this
    0

    Comment number 302.

    @285 Proud Welshman - I think you'll find that the comforts you mention are relatively affordable products of globalisation which are also accessible to yourself. Please forgive the presumption, but I can't buy a house for what you probably paid for yours relative to average wages.

  • rate this
    +7

    Comment number 301.

    Worked fifty years and paid my dues, can I now become rich please because I think someone must be pinching mine.

 

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