Big income rise for retired households

The average disposable income of retired households was over two and a half times higher in real terms in 2010-11 than in 1977, according to an official report. By comparison, people of working age saw their income grow just two-fold over the same period.

Key points

• More than half of the rise over the period examined can be attributed to growing income from private pension schemes.
• Income from the state pension and other cash benefits has also grown in real terms. But income from investments has fallen since 1991, to a level just above that in 1977.
• Retired households pay 29 per cent of their gross income in tax, the same percentage as in 1977. But they pay a smaller proportion in direct taxes, and more in indirect taxes such as VAT.
• Income inequality between retired households increased rapidly between 1977 and 1991, then fell gradually. Nonetheless in 2010-11 the richest fifth had 3.8 times more income than the poorest fifth, compared with a ratio of just 3.2 in 1977.

Source: Income of Retired Households, 1977–2010/11, Office for National Statistics
Links: Report | Guardian report | Professional Pensions report