22 October 2015
For the first time, the average retiree has a higher weekly income than those of working age, according to the Institute of Fiscal Studies.
On average pensioners have an income of £394 a week, whereas the median wage among the working age population stands at £385, after housing costs and dependents have been taken out.
IFS director, Paul Johnson, told The Independent: “What we’ve seen is pensioners closing the gap. If you go back 30 years we really were known across Europe for having dreadfully poor pension provision and dreadfully poor pensioners. What we’ve seen consistently since the 1980s is pensioner income rising in relation to non-pensioner income. It comes down to perceptions of fairness. The government would say these guys are retired and it’s only fair to maintain their standard of living. But younger people, whose incomes are falling, are paying for these pensions and are suffering from the fact that someone else has got the benefit of the increase in housing prices.”
While the gap has been jumped on by right wingers as an indication that we must “end generous increases to state pensions” – what the generational gap really reflects is falling real-term incomes.
The IFS is also keen to point out that while many current retirees may be enjoying a comfortable retirement, this probably won’t be the case for future generations.
Johnson said; “We have achieved an astonishing turnaround in the incomes of pensioners over the last three decades, without increasing public spending to levels seen in many other continental European countries. But the longer term future looks very uncertain. Those now in their 20s, 30s and 40s may well end up with lower incomes in retirement than their parents.”