The income gap between the wealthiest and poorest pension is growing, with those in the top pension income band now having an average weekly income of almost £1,000.
The latest government figures on pensioner wealth, show that average weekly income for the wealthiest pensioners has grown faster over the past 10 years, than those in the lowest income group.
Analysis by Aegon shows that the richest 20 per cent of pensioners, equivalent to 840,000 couples, now have an average net income (after income tax, NI and council tax) of £988 per week. This equates to an annual income of £51,376.
These government figures include all sources of pensioners’ income such as pensions, investments, earnings and benefit income.
The pension company points out that to generate a weekly income of £988 would require a pension fund of more than £1.15m – if they were using an annuity.
These wealthy “pension millionaires” have seen their weekly income increase by 15 per cent over the last decade — from £858 to £988. In contrast the poorest 20 per cent have seen a lower 14 per cent increase from £234 to £267 for the same period.
This means the current difference between the income of the top and bottom 20 per cent of pensioner couples has risen by almost £100 from £624 to £721 per week.
Aegon’s pensions director Steven Cameron says: “Over the last 10 years, pensioner couples in the highest income distribution band have seen their average weekly income increase to £988 a week. This large proportion of retired couples can legitimately consider themselves ‘pensioner millionaires’.
“In fact while many people may assume their house is their most valuable asset, for many it could actually be their pension.
“However, the figures also show the bottom fifth have an average weekly income over £700 less at just £267 per week per couple, or £134 per individual, which is substantially under the full rate of the new state pension, currently £168.60 per week.
“Many of these pensioners may have reached state pension age before 5 April 2016 and be receiving the ‘old’ state pension or have had insufficient National Insurance records to qualify for the full rate.”