Are pensioners better off than people of working age?

28 April 2017
What was claimed

The average pensioner household is now better off than the average working household.

Our verdict

That’s correct, once you account for housing costs, according to research done by the Resolution Foundation think tank. The Institute for Fiscal Studies also found in 2015 that the median income among pensioners, after housing costs, was 5% ahead of the typical non-pensioner. It’s not the case before housing costs.

“The average pensioner household now is better off than the average working household.”

BBC Question Time audience member, 27 April 2017

This was the recent finding of a widely reported study by the Resolution Foundation for its Intergenerational Commission. It found that the median pensioner household in Great Britain is now £20 a week better off compared to the median working-age household after housing costs are included. We’ve asked for a bit more detail on this figure.

A much higher proportion of pensioners own their own home (and so face minimal housing costs) than those among the working-age population. For this reason the report points out that average working-age incomes before housing costs remain above those of pensioners.

Pensioners here refers to anyone of State Pension age or over, so some may not be claiming their pension yet and may still be in work.

The Institute for Fiscal Studies had similar findings in 2015 when they said that the median income among pensioners, after housing costs, was 5% ahead of the typical non-pensioner. They put the change down to growing private pension pots and increasing state support.

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Higher incomes don’t necessarily mean better living standards

The Intergenerational Commission also cautions against reading too much into whether having higher incomes after housing costs means that average pensioner households have a higher standard of living.

It points to things like the fact that pensioners may experience a higher level of inflation than working-age groups (although it said this hasn’t been the case in recent years). But, it also notes aspects that might push up pensioners’ living standards, such as  paying less for things like transport and leisure activities.

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