Wednesday, 24 October 2012

Big jump in retirement incomes

Who's incomes have done better over the last quarter of a century: working people or those who have retired and are, mostly, depending on pensions?

According the Office for National Statistics, pensioners have done better by quite a wide margin,

Retired people's disposable household incomes are more than two and a half times larger, in real terms, than they were in 1977.

Average real incomes for the non-retired have risen as well. They've more than doubled - so a big increase, but not so substantial.

It is worth emphasising that these figures are adjusted for rising prices and wage inflation. In a growing economy, incomes have improved substantially in real terms.

But there are some other points to note from the ONS pension stats today:

*There's still a big drop in household income when you retire, the average drops from £35,008 to £17,674.

*There are still large numbers on low incomes: 45% of single pensioners have pension incomes below £10,000 a year.

*The more generous workplace pension schemes are being axed, so the outlook for retirement incomes isn't nearly so good.

That's what called the "pensions time bomb" - the result of the good schemes falling away and people saving less.

And it's why the government is forcing companies to enrol staff automatically in workplace schemes.

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