The Office of National Statistics (ONS) has released latest figures on the income of retired households over the last 40 years.

For the financial year ending 2016, 96% of retired households had an annual disposable income of more than £10,000, compared with 21% in 1977.

More than half the increase in income can be attributed to increased private pension income, which has increased nearly sevenfold over the period.

Despite the growth in average disposable income, inequality between retired households has shown increases in recent years, though they remain small relative to increases in income inequality for retired seen throughout the 1980s.

In the financial year ending 2016, retired households in receipt of a private pension had disposable incomes that were 1.6 times higher than households that were not.

Although since, FYE 2011. The average value of cash benefits for retired households has generally been increasing, those without any form of private pension income are not having their incomes supplemented enough by these cash benefits amounts to reduce overall inequality in income.

Morten Nilsson, CEO of NOW: Pensions, said the report is good news: "The positive news is that the number of workers enrolled into workplace pension schemes is at a record level as a result of auto-enrolment - employees are increasing their retirement incomes, which will give them a better standard of life in the future," he said.

"Over the next two years, increases will be made to the standard default contribution up to 8% and this is made up of 4% employee contribution, 1% tax relief and 3% employer contribution, which will benefit the many who take advantage of the scheme."

"The prospect of living on just the Basic State Pension, at less than £160 a week, is a salutary reminder for those that opt-out of workplace pensions, foregoing employer contributions and tax relief - as well as their own savings"

First published 10.08.2017

Lindsay.sharman@wilmingtonplc.com