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
    +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
    +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
    -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
    +26

    Comment number 254.

    The reality is that pensioners haven't got richer, just that younger people havent got richer too. For several decades the young have expected that differential to rise & its not doing so.Youth unemployment was rising before the crash, & it would be more useful to understand why. At the same time jobs have declined as the population has swollen & the pursuit of the cheap has driven work abroad.

  • 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.

 

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