According to a report by the think-tank, published today, the rise in income for the group is down to new pensioners, many of whom are still in work, who own their homes and who have access to generous private pension pots.
These findings may add to the pressure on government to reconsider the viability of the state pension triple lock. In the Autumn Statement last November, Philip Hammond raised the prospect of a review sometime in the next Parliament. However, recent analysis has suggested that savings to the public purse from scrapping the triple lock would be minimal.
Today’s report, As Time Goes By, tracks the scale of income growth across different generations over the past half century.
It found that typical pensioner households are now £20 a week better off than working age households after housing costs. This represents a significant turnaround from 2001, when pensioners’ incomes were £70 lower than those of working-age households.
However, the think-tank noted that this overall increase in pensioners’ income was not evenly distributed. While income across the pensioner population has grown by nearly one third (30%) since 2001, the average income of a person who turned 65 in that year had grown by 7% by 2014.
Adam Corlett, economic analyst at the Resolution Foundation, said it would be a mistake to assume that all pensioners were enjoying some kind of boom. “The reality is quite different,” he said. “The incomes of individual pensioners grew relatively slowly, particularly once they stopped working.
“Instead, the main driver of pensioner income growth has been the arrival of successive new waves of pensioners, who are more likely to work, own their home and have generous private pension wealth than any previous generation.”
The rise of occupational pensions – which now provide £5,000 each year for the average pensioner – have contributed to the growth in income for the group. Also, despite rises in the pension age, one in five pensioner households now include at least one person who works. This has gone up from one in eight in 2001.
The shift from social rented accommodation to home ownership among pensioners has reduced housing costs and therefore boosted disposable income. Almost three quarters (73%) of pensioners own their home, up from 64% in 2001.
However, Corlett said, not all pensioners would be able to call on income from sources such as private pensions and work, and the state pension “will always be the main income for many pensioners”.
He added that it would be a mistake to think young people today would be able to “draw on the kind of wealth that recent pensioners have accumulated, given the recent fall in home ownership and decline in generous defined benefit schemes”.
The challenge will be to ensure the record incomes enjoyed by recent pensioners “can endure for future generations too.”
