Older workers contribute £9bn a year to UK’s finances through income tax
Over the past 20 years the proportion of pensioner households – defined by Aegon as having at least one person over state pension age – continuing to work has increased from 12% in 1997/98 to 17% today.
The growth in the number of pensioner households working has been accompanied by a 30% rise in their average weekly earnings, from £410 in 1997/98 to £534, the study found.
Single pensioners not in couples have seen a 71% increase from £199 to £340 per week.
Aegon said there are 8.7 million pensioner households in the UK compromising around 12.8 million people and 1.4 million of these households contain a worker.
Assuming each individual in a pensioner couple earns the same amount, and that both use their full income tax personal allowance, Aegon’s analysis found that pensioner households are contributing nearly £8.6bn a year in income tax towards the nation’s finances.
Steven Cameron, pensions director at Aegon, said: “Gone are the days when reaching state pension age meant a total end to work. Many people are choosing to keep working and earning, perhaps by cutting back gradually on the amount of work they do, even once they’ve started taking their pension. These people are contributing significant amounts to the nation’s finances through the tax they generate while also helping the broader economy through their work.
“We’re living in what has been described as a golden era for pensioners, with many benefiting from generous final salary pensions and increases to the state pension. When you combine this with earnings from post retirement work, it’s not surprising that many pensioners are living on very decent incomes. However, both final salary pensions and inflation busting increases to the state pension are unlikely to continue indefinitely so it’s important that society is changing with more people able to choose to work past traditional retirement ages.”