Pensioners’ incomes beat inflation

Wednesday, 02 July 2014

08:44

press_release

British pensioners have seen their income grow for the first time in real terms in 3 years – with the triple lock protection of the State Pension and more older people choosing to stay in work.

New official statistics show that, in 2012/13, average gross incomes of pensioner couples and singles grew to £477 – an above inflation rise – with state benefits accounting for 44% of the total.

The government’s State Pension triple lock ensures that pensioner incomes are now protected against inflation – increasing each year by whichever is the highest out of prices, average earnings or 2.5%.

Last year this meant that the Basic State Pension increased by 5.2% and Pension Credit by 3.9%, compared with the 3.1% increase in Retail Price Index (RPI) inflation.

The Pensioners’ Incomes Series for 2012/13 also reveals that, over the past 14 years, average net incomes for pensioners after housing costs have been taken into account grew by 37% in real terms. Contributing to this rise is a greater number of pensioners choosing to remain in work, with earnings among this age group growing by 62%.

Minister for Pensions Steve Webb said:

I am proud of our work to protect pensioners, the success of which is borne out in these figures.

The triple lock has marked a profound shift in how the state supports pensioners and it means that 12.7 million people will be over £400 a year better off by the end of this Parliament.

Alongside the guarantee of a strong State Pension, we are also seeing more older people choose to phase their retirement in a way which suits them. This government’s historic decision to end the discrimination of the mandatory retirement age has made that possible for thousands of people.

Figures released today show:

benefit income, which includes the State Pension, has increased by 27% since 1998/99
in 2012/13 state benefits accounted for 44% of pensioners’ incomes, occupational pensions made up 27%, earnings 17%, investment income 7%, and personal pensions 4%
since 1998/99, the fastest growing sources of income are earnings, which has increased by 62% in this time, and personal pension income, which has increased by over 250%
28% of pensioner units (single pensioners or couples) received at least one income-related benefit in 2012/13, such as Pension Credit, Housing Benefit or Council Tax Benefit
22% of pensioner units were in receipt of disability benefits – pensioner couples received an average £88 a week from disability benefits in 2012/13 compared with £69 for single pensioners

The triple lock builds on the government’s ongoing protection of key benefits for older people including:

free eye tests
free NHS prescriptions
free bus passes
free television licences for those aged 75 and over
Winter Fuel Payments

Cold Weather Payments were permanently increased from £8.50 to £25 in 2010.

More information

Read The Pensioners’ Incomes Series United Kingdom, 2012/13

Between 2011/12 and 2012/13, gross mean income grew from £475 to £477. Net mean income before housing costs grew from £395 to £397 and net mean income after housing costs grew from £363 to £364.

Mean net income after housing costs has risen faster than before housing costs. After deducting housing costs, mean net income has grown by 37% since 1998/99 compared with 32% before housing costs.

Pensioners’ mean net income has grown faster than incomes for the whole population over the last 14 years.