Pensioner incomes surge since 2008 crash, as working households' pay stagnates
3 min read
Pensioners have seen a sustained rise in incomes since the financial crisis, while working households’ living standards have stagnated, according to new figures published this morning.
The Office for National Statistics said average post-tax incomes would go up by 1.8% this year to reach £27,200 per household.
While retired people still have significantly lower incomes, they have seen their situation improve dramatically since the 2008 crash, with a 14.9% real terms improvement.
ONS estimates suggest pensioners will on average have disposable incomes of £22,400 a year, compared to £19,500 in the 2007/08 financial year.
However non-retired households have seen almost no change, with real terms incomes estimated at £29,300 for 2017, compared to £29,200 in 2008.
The ONS statistics are based on a technique called ‘nowcasting’ – which uses current available data to work out economic figures, rather than relying on assumptions about future trends and behaviour.
Retired people have been helped by the Government’s ‘triple lock’ on the state pension, which ensures that the payment increases by the highest of earnings growth, CPI inflation or 2.5%.
In the 2016/17 financial year that meant state pension payouts went up by 2.9%, the equivalent of overall wage growth in the British economy.
That took the weekly state pension from £11.595 to £119.30, while pensioners also receive benefits such as free bus passes and Winter Fuel Payments.
The Resolution Foundation thinktank said the figures showed a "disastrous decade" for working households.
“Household incomes are being squeezed by 2.6 per cent inflation, with real wage growth negative and the working-age benefits freeze biting hard – despite the UK’s positive story on employment and the National Living Wage," said senior economic analyst Adam Corlett.
"Looking at the period since the financial crisis we have also seen hugely different experiences for retired and non-retired households. Working-age incomes have only just returned to where they were in 2007/08, while those of retired households have grown by 15 per cent over the same period. This marks a truly disastrous decade for the incomes of working people."
TRIPLE LOCK GONE?
Last month Work and Pensions Secretary David Gauke said he did not think the state pension triple lock would still be in place in 10 years' time.
"If you look at what the triple lock does, it has a ratchet effect because pensions go up by either inflation or earnings - over a period of time it will mean that a greater and greater share of GDP goes towards paying the state pension, even without any increases in pensioner numbers.
"Another way of putting it is a smaller and smaller percentage of GDP goes to non-pensioners. Do I think in 10, 20, 30 years time we will still have a triple lock, I cannot see in all honesty how we can."
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