New data lifts the lid on retirement income trends

What is the average income in retirement for today’s retirees… where is the income coming from, which regions are doing best and what trends can we see emerging? New data from the ONS reveals all, writes Richard Collinson, CEO of AAA members

The Family Resources Survey (FRS) for the financial year ending (FYE) 2023 has just been published by ONS and it makes for fascinating reading – especially as it looks at key trends since 1995.

The report examines how much income pensioners receive each week and where they get that income from. It looks at how their incomes have changed over time and variations in income between different types of pensioners.

So what are the main stats?

In FYE 2023, the average income for pensioner couples was £561 per week. This was more than twice that of single pensioners, who had an average income of £267 per week. This difference is statistically significant.

  • Single male pensioners had higher average incomes (£286) than single female pensioners (£259).
  • Fewer pensioners are now receiving income-related benefits: since the survey began in FYE 1995 when 37% of pensioners were in receipt of such benefits, it has now gone down to 21%.
  • From the 1980s, coverage of high contribution defined benefit (DB) schemes started to decline, with most private sector DB schemes now closed to new joiners.
  • 95% of all individuals receiving a private pension payment do so through a DB or DC Annuity. However, individuals who have just started accessing their private pension are much more likely to be receiving this through a Lump Sum or other DC product (49%).
  • Income from occupational pensions was 32% of total gross income for pensioner couples and 26% for single pensioners.
  • Income from earnings made up six per cent of total gross income for single pensioners. For pensioner couples, 18% of total gross income was from earnings.
  • Benefit income, which includes State Pension, made up 51% of total gross income for pensioners where the head was aged 75 or over and 37% of total gross income for pensioners where the head was aged under 75.
  • Occupational pension income accounted for 32% of total gross income for pensioners over 75 and 29% for those under 75.
  • Earnings income accounted for 21% for pensioners where the head was under 75; where the head was aged 75 or over, it was five per cent.

Which regions are receiving most?

  • Pensioner incomes differed markedly between regions and countries – pensioner couples in the South East had the highest average income, 14% higher than the UK average. They were lowest in the North East, where incomes were 10% below the UK average, and Yorkshire and the Humber, where incomes were nine per below the UK average.
  • The area with the highest average income for single pensioners was Wales, where incomes were 10% above the UK average, followed by seven per cent above the UK average for the East.
  • Single pensioners in London had the lowest average incomes. Their average income was six per cent below the UK average.

Where is our retirement income coming from?

  • Nearly all pensioners (98%) were in receipt of the State Pension in FYE 2023.
  • The percentage of pensioners in receipt of disability benefits in FYE 2023 was 19%, an increase compared to 14% in FYE 1995, though this figure was 23% in FYE 2010.
  • Occupational pension income was received by 62% of pensioners in FYE 2023 compared with FYE 1995 and FYE 2010 saw 57% and 60% respectively.
  • In FYE 2023, 17% of pensioners were in receipt of income from personal pensions, compared to 16% in FYE 2010 and four per cent in FYE 1995.
  • Private pension income was received by 70% of pensioners in FYE 2023. FYE 1995 and FYE 2010 saw 59% and 69% respectively.
  • Investment income was received by 56% of all pensioners in FYE 2023. The percentage of pensioners in receipt of investment income has decreased from 70% in FYE 2010. This figure was 73% in FYE 1995.
  • Pensioners in receipt of earnings in FYE 2023 was 15%, compared to 11% in FYE 1995, though this figure was 19% in FYE 2010.

Distribution of pensioners’ incomes

*     While benefit income, including State Pension income, was the largest source of income for both single pensioners and couples in the bottom fifth of the income distribution over the three-year period FYE 2021 to 2023, for the top fifth of both couples and singles, the largest source of income was occupational pension income (39% for couples and 43% for singles).

How are pensioners faring compared with those below pension age?

The percentage of pensioners in the top fifth of the overall population income distribution has increased since 1995.

  • In FYE 2023, 49% of pensioners were in the top half of the overall income distribution. In FYE 1995, this percentage was 38%. This follows a period of sustained increases was observed from FYE 2003 to FYE 2013, where pensioners in the top half of the overall income distribution rose from 38% to 52% – before slipping back to 49%.
  • The percentage of pensioner couples in the top half of the income distribution was 44% in FYE 1995. In FYE 2023, this was 53%.
  • The percentage of single pensioners in the top half of income distribution was 39% in FYE 2023. In FYE 1995, this was 29%.

To dig into the figures further, click onto the link here:

Find out your retirement future

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You can find out the answers in minutes using the RetireEasy LifePlan.

You can even run different scenarios to see at a glance how the sums change if your circumstances change, or if you decide to save (or spend!) more or less than you had originally planned.

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