The latest Pensioner Income Series data published by the government has served to highlight the need for people to take more responsibility for building their own retirement income rather than relying on State support, pension experts have argued.
According to the Department for Work & Pensions’ Pensioner Income Series report, pensioners received £296 per week on average in 2015/16 – compared with £258 in 2005/06.
The report revealed almost all (97%) of pensioners receive the State Pension but the percentage receiving income-related benefits fell from 34% a decade earlier to 25% in 2015/16. Over the same period, those receiving income from workplace pensions rose from 59% to 62% and those receiving personal pension income rose from 12% to 18%.
Just group communications director Stephen Lowe said the figures showed older people are increasingly relying on workplace and personal pensions to pay the bills while the proportion of income from the State and other sources was declining.
He added: “The deal is the State is only going to cover the basics, meaning personal savings and employer contributions are doing the heavy lifting. The rest is up to us – and that requires people to think carefully about the long-term need for income versus the short-term appeal of capital. The only true pension freedom is having enough to live on in retirement.”
‘Diverse experience of pensioners
‘Royal London director of policy Steve Webb challenged the report’s conclusion that pensioners are growing richer, pointing out incomes in 2015/16 were no higher than a year earlier and that the newly retired were actually less well off than in the previous year.
He added: “While there are clearly some pensioners who enjoy good company pensions and have benefited from house price inflation, there are clearly also many who are not in such a fortunate position.
“Any change on state pensions needs to take full account of the diverse experiences of pensioners in Britain today and not simply assume pensioner living standards will keep on rising.”
Aegon pensions director Steven Cameron suggested that while, as a generation, today’s retirees might be set to be the wealthiest the country has ever seen, the picture is “almost certain” to be different for future generations.
He explained: “Defined benefit schemes are becoming increasingly rare and retirement income more directly linked to the personal saving contributions made by the individual and their employer into ‘defined contribution’ schemes over their working life.”