Today's pensioners 'much better off'
Today's pensioners 'much better off'
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Wednesday, 12, Apr 2006 02:32
Pensioners nowadays are almost twice as well-off as their counterparts in 1979, a new report has revealed.
According to research by pensions and investment group Clerical Medical, average household incomes for pensioners have in fact increased by 97 per cent since 1979 in real terms, from an average of £47 a week to £306 a week in 2004.
And despite recent high-profile concerns about burgeoning pension deficits, the study also found that average pension incomes grew significantly between 1999 and 2004, rising by 13 per cent in real terms.
Nevertheless, the study emphasised the increasing importance of private pensions over state provision, with half of pensioners' income now provided by private sector pension plans, compared with 38 per cent in 1979.
"There has been a significant shift in the balance between pension income sourced from the state and private pensions over the last 25 years," said John Hiew, managing director of financial services at Clerical Medical.
"Almost 70 per cent of retired households now rely on their private pension arrangements to supplement the cost of living in retirement, compared with 40 per cent in 1979."
The report also found that almost three-quarters (73 per cent) of pensioners bring in additional income from investments, with earnings from investments up 45 per cent since 1979.
The findings will be welcomed by the government, which has stressed the importance of private sector pension savings in recent years in response to concerns about the growing costs of state sector pensions.
Work and pensions secretary John Hutton will unveil a white paper on pensions reform next month, which is expected to implement many of the proposals recommended by pension commissioner Adair Turner earlier this month.
Lord Turner's proposals would see the retirement age raised to between 67 and 69 by 2050, introduce auto-enrolment for all employees, require a modest level of employer compulsion and create a new National Pensions Saving Scheme (NPSS), which would see those without access to a company pension scheme automatically enrolled into the NPSS when they start a new job.