Interactive Investor

Pension incomes up £100 per week in 20 years

Richest fifth receive 20 times more workplace and private pension income than the poorest fifth, writes Alice Guy.

30th August 2023 14:24

by Alice Guy from interactive investor

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Government figures on pension incomes, released today, shine a light on the huge £100 increase in weekly pensioner incomes over the last 20 years as the state pension triple lock and increasing workplace and private pension wealth have lifted millions of pensioners out of poverty.

However, there is a growing pension divide as the poorest fifth of single pensioners now receive 20 times less workplace and private pension income than the richest fifth.

The figures show a slight decrease in pension income since last year, but this is thought to be mainly due to differences in the types of households sampled between the two years.

All pensioners (average weekly income) £2002201220212022Difference since 2002
Benefit income20123626325728%
Workplace and private pension income12317121821390%
Investment income44404841-7%
Net income before housing costs28436140939037%
Net income after housing costs25032437634940%

Source: Gov pension income data, median average (adjusted for inflation)

  • Pensioner households now have nearly £100 more income each week on average after housing costs than 20 years ago, a 40% increase in real terms since 2002.
  • £56 of this increase is due to higher benefit income, the state pension triple lock was introduced in 2010 as a guarantee the state pension would increase by the higher of average wages, inflation and 2.5%.
  • Pensioners also enjoyed an amazing £90 increase in workplace, private pension and investment income on average during the last 20 years.
  • Single pensioners in the bottom fifth, received £18 per week workplace and private pension income, compared to £366 for those in the top fifth
  • Pensioner couples in the bottom fifth, received £42 per week workplace and private pension income, compared to £755 for those in the top fifth

Workplace and private pension income (average weekly)




Bottom fifth

Top fifth

Bottom fifth

Top fifth

Single pensioners





Pensioner couples





Source: Gov pension income data, mean average (adjusted for inflation).

Alice Guy, Head of Pensions and Savings, interactive investor says: “On average, pensioners are wealthier than ever before. Average pension incomes have increased an amazing £100 per week during the last 20 years, with millions of ordinary pensioners lifted out of poverty and able to enjoy more disposable income in retirement.

“Increasing pension incomes reflect the increasing state pension and also the boom of workplace pension schemes during the 1950s and 1960s. There are now more pensioners in the top fifth of households in terms of income, 19% in 2022 compared to 13% in 1995.

“The triple lock and the introduction of a more generous state pension system in 2016, have both significantly boosted the state pension incomes. Someone retiring on the basic state pension in 2002 only received the equivalent of £128 today, compared with £204 each week for someone now on the new state pension.

“Despite rising average pension incomes, there’s also an increasing pension wealth divide, and it’s mainly due to workplace and private pension wealth, with pension couples in the top one-fifth receiving 17 times as much private pension income as those in the bottom fifth and single pensioners in the top one-fifth receiving 20 times as much private pension income as those in the bottom fifth.

“This pension divide is because although older-style final salary workplace pensions were extremely generous, they were only enjoyed by some workers. Pensioners are more likely than today’s workers to have paid into a final salary pension scheme, but until recently, there were also many workers with no workplace pension at all. Workplace pensions were only required for all employers when auto-enrolment rules were introduced in 2012.

“The good news is that nearly all employees are now entitled to a workplace pension, so this pension divide is likely to reduce.

“The bad news is that today’s workers are much less likely to enjoy generous workplace pension wealth in retirement. This means, we may soon see a peak in workplace pension wealth as many future retirees will have a much lower workplace pension income. Final salary schemes have all but withered away in the private sector, with the number of private sector employees paying into a final salary pension reducing from 3.5 million in 2006 to just under 0.9 million in 2022 as thousands of schemes closed their doors.

“The figures highlight the importance of workplace and private pension saving as a key part of most people’s retirement income. On average, pensioners workplace pension income, almost matches the level of their state pension and benefit income and they would struggle to live on the state pension alone.

“Despite rising average pension wealth, there is still a significant minority of pensioners living in poverty, especially if they are single. For single pensioners, 22% of households were in the bottom fifth of households in 2022 in terms of income after housing costs, compared to only 15% in 2010.

“Women are also more likely to be living in poverty in retirement, with 21% of single women in the bottom fifth compared with 17% of single men.”

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