Retired people are doing better and better from their private pensions
Retired households received an average income of £9,500 from private pensions and annuities in 2013-2014, a real terms increase of nine per cent from 2012-2013, when the average was £8,800, new figures from the Office of National Statistics show.
That's an increase of 26 per cent since the start of the financial crisis in 2007-2008, when the average received was £7,500.
Increases in income from private pensions were largest among the highest earners, with those in the top 60 per cent of the income distribution faring best, driven partly by rises in the amounts received and partly by the ageing population – ie. the number of households receiving pensions.
Read more: Budget 2015: Current pensioners could sell their annuities for cash under new rules
Because of that, on average 42 per cent of gross income in retired households now comes from private pensions, up from 36 per cent in 2007/2008. State pensions, investment income and housing benefit are also large components of gross income.
As taxes and benefits have a more redistributive effect on the income of these households, income inequality is lower for retired households than non-retired households. The state retirement pension plays the largest part in this.
Not surprisingly, pensioners also receive higher benefits from the National Health Service, worth an average of £5,900 per year, per household, compared to £3,500 for non-retired households.