Stark charts prove pensioners far worse off than they were 20-years-ago

Angela Rayner asked if she supports automatic pension increase

Retirees may well have cause for optimism in hearing that the new full State Pension could rise from £203.85 to £221.20 a week come next April.

However, this comes with a number of caveats. On the one hand, this 8.5 per cent hike will only stick if the triple lock is maintained – something Prime Minister Rishi Sunak has not yet committed to doing after next year’s general election.

With the ageing population imposing an ever-heavier fiscal burden on those of working age, the policy is becoming ever more unaffordable and politically contentious. Labour has also been weary of keeping it.

On the other hand, the lauded £11,500-a-year figure overlooks the nine million older pensioners on the basic State Pension – currently at a far lower £156.20 a week – who, despite the same increase, will only net £8,800 a year.

But the real reason the older generation aren’t likely to find themselves better off next year? Long-term data show that just doesn’t happen.

READ MORE: Triple lock is ‘unsustainable’ – Hague calls to axe formula over 5 years

In 2002, the average pensioner income came to £439 a week. Two decades later, this figure stood at £588 – a notable increase, but far from the full story.

After shooting up by almost 50 per cent in the Noughties, earnings last year were roughly equal to what they were in 2017 – this growth has stagnated completely of late.

Between the financial years ending 2021 and 2022, the latest data show the biggest drop since records began, worth some £832 a year.

Even more striking is how far retiree incomes have now lagged behind inflation. Keeping pace since 2002 would have entailed an average weekly pensioner income of £717 last year.

Retirees today are, in this way, some £6,700 a year worse off.

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State Pension amounts, for their part, have broadly kept pace with inflation. This is largely thanks to the triple lock, which ensures the rate goes up every year by the highest of either wage growth, inflation or 2.5 per cent. 

The 8.5 per cent bump hoped-for next year is down to CPI-busting total pay growth figures released earlier this week. 

Benefit income for retirees, however, only made up 44 per cent of the total in the financial year ending 2022. Income from other sources has dwindled. 

Investment income – from deposits or share dividends for example – was typically £44 a week in 2002, falling to just £41 in 2022. Similarly, earnings income, for those who kept up some form of employment, went from £69 to just £74.

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