Private Pensions Boost Retirement Income by £12,500

More retired households than ever are benefiting from private pension income – but it means the gap between the haves and have nots is widening

Emma Wall 8 August, 2017 | 4:00PM

Private pensions have provided a welcome £12,500 boost to retired households, data from the Office for National Statistics has revealed today. The percentage of households drawing income in retirement from a workplace pension or SIPP has also boomed – up from just 45% in 1977 to 79% today.

Private pensions are the biggest contribution to the average retired household - £12,500 of the average income of just shy of £30,000. The State Pension makes up around £10,000 of this total today. Twenty years ago, the State Pension and private pensions were more equally weighted as part of retired households’ income, although the total was much lower at just shy of £20,000, adjusted for inflation. Looking back further to 1977, total household income in retirement was just over £10,000 – and the State Pension made up the bulk of this.

“Although state pension income has almost doubled over this period, over half of the increase in the gross income of an average retired household is due to an increase in private pensions income which is around seven times as high in 2015/16 as it was in 1977,” the ONS reveals.

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Emma Wall  is former Senior International Editor for Morningstar

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