Single pensioner income inequality widens over past decade

The gap between the poorest and richest single pensioners has increased "considerably" over the past decade, Broadstone has found.

In analysis of the Department for Work and Pensions’ pensioner income series, the firm found that single pensioner incomes in the bottom quintile grew by 2% before housing costs between 2010/11-2011/12 and 2020/21-2021/22.

This is an average increase of £208 per year.

Those who are in the top quintile saw income growth over the same period of 9%, equivalent to £2,496 every year, an increase of £2,288 compared to those in the lowest incomes.

The contrast was even more marked after housing costs, with single pensioners in the bottom income quintile seeing their income increase by just £1 over the past decade, compared to £55 per week for those in the top quintile, equating to £2,860 per year.

Meanwhile, single pensioners in the bottom quintile saw 88% of their gross income before housing costs provided for by the state pension and benefits, a slight increase from 87% a decade earlier.

It suggests they entered retirement with not much of a pension pot or other savings.

In contrast, single pensioners in the top quintile saw the state pension and benefits account for under a third of the income of those in the top quintile (31%), where a proportion was made by occupational pension income (34%), pension income (32%) and earnings income (16%).

Head of defined contribution workplace savings at Broadstone, Damon Hopkins, said: "These figures show that the gap between the ‘haves’ and ‘have-nots’ in retirement has widened sharply. Single pensioners already face significant income pressures, especially as they must pay bills via a single income, but they have barely seen any increase in their income over the past 10 years.

"Despite triple lock increases to the state pension and increases to other benefits, it is clear that more people are entering retirement with inadequate savings leaving them reliant on these sources of income."

Hopkins added: "The data also demonstrates the urgent need for pension savers to consider the standard of living in retirement that their current contribution rates are likely to achieve. The average single pensioner’s income is under £17,000 after housing costs, around half the £31,300 annual income the PLSA indicate is needed for a moderate living standard."

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