TRENDS IN PENSIONER
INCOMES
Since 2010 the state pension has been uprated by the triple
lock – the better of increases in prices, average earnings or 2.5%. This blog
presents some analysis of pensioner incomes in the recent period.
Figure 1 shows
that the basic pension has increased in value by nearly £5 per week since 2010
and improved much more rapidly as a proportion of average earnings.
Pensioner poverty
Figure 2 shows that pensioner poverty has also
been falling since 2006/7, though not in the most recent year for which we have
data.
Figure 3 for 2015/16 and Figure 4 for 2007/08 provide a decomposition analysis of pensioner
incomes by quintile group. Wages and salaries contributed very little to gross
income in 2015/16 - 2.2% on average, slightly more for the highest quintile.
Private and occupational pensions contribute 43.8% on average in 2015/16, up
from 36% in 2007/08, and the contribution is larger for richer quintile groups.
The state pension share of gross income is 37.1% on average but 66.8% for the
bottom quintile; its share of gross income has changed very little between
2007/08 and 2015/16. Direct taxes are broadly progressive and indirect taxes
very regressive; the bottom quintile pays 36.2% of gross income in direct and indirect
taxation and the top quintile pays 29.4%.
Comparisons pensioners and children
Figure 5 shows the increase in equivalent net
disposable income of pensioners compared with families with children since
2007/08. In 2009/10, pensioners had 75% of the net income of families with
children. By 2015/16, this ratio had increased to 85.6%. Analysis
of EU SILC data shows that since the start of the financial crisis the UK,
as with almost all countries in the EU, has shifted resources away from
families with children and towards pensioners.
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