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One in five retired couples are ‘pensioner millionaires’

Emma Lunn
Written By:
Emma Lunn

A fifth of pensioner couples have a weekly income of £988, which would cost more than £1m if bought through an annuity.

Analysis of government figures by pensions firm Aegon found the richest 20 per cent of pensioners, equivalent to 840,000 couples, have an average net income (after income tax, National Insurance and council tax) of £988 a week or £51,376 a year. These government figures include all sources of pensioners’ income such as pensions, investments, earnings and benefits.

In order to replicate a weekly income of £988 from savings alone, a couple retiring today at age 65 would need to have a shared pot worth £1,152,250.

The analysis also highlights that the income gap between the richest and poorest pensioner couples has increased over the past 10 years.

While the richest have seen their incomes increase by 15 per cent from £858 to £988, the poorest 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.

Steven Cameron, pensions director at Aegon, said: “Over the past 10 years, pensioner couples in the highest income distribution band have seen their average weekly income increase by 15 per cent to £988. A weekly income of this size would cost £1,152,250 to buy through an annuity which means 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, whilst the top fifth of pensioner couples have seen their income rise to £988 per week, the figures 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.”