The latest figures show that the average pensioner income jumped from £206 in 1995 to £392 in 2010, but since then, there has been a marked slowdown despite the considerably higher cost of living.
The figures show that younger pensioners have higher average incomes (£455 per week) compared to those aged over 75 (£372).
Couples have higher incomes per person than single pensioners, with the average income for pensioner couples being £595 per week, whereas for single pensioners, it’s £282. Single men typically have a higher income (£292 per week) than women (£278).
Benefit income, which includes the state pension, was the largest component of total gross income for pensioner couples and single pensioners. This was 56% for single pensioners, while for pensioner couples, it was 37%.
‘Substantial decline in pensioner purchasing power’
Thomas Lambert, financial planner at Quilter, said: “According to the Bank of England’s inflation calculator, £392 in 2010 would have been worth £586.76 in 2024 – a stark difference, indicating a substantial decline in pensioner purchasing power.
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“Despite this real-terms slowdown, a far smaller percentage of pensioners received income-related benefits in 2024, sitting at 20%, down from 31% in 2010 and 37% in 1995. This decrease highlights the impact of rising incomes from the state pension and private pensions, reducing eligibility for benefits. Unsurprisingly, single pensioners were much more reliant on this state support to bolster their pension income.”
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Average pensioner incomes have hit £407 per week – a huge uplift since the £206 recorded back in 1995. However, growth has tailed off in recent years – back in 2010, it was £392. There’s lots of reasons for this – for a start, pensioner take-up of income-related benefits has dwindled over the years; one in five pensioners receive them now compared to 37% back in 1995.
“The rise in occupational pensions also made a massive contribution, although the slow death of defined benefit schemes in more recent years will have slowed the surge – because defined contribution pensions tend to be less generous. As we move towards the tenth anniversary of Freedom and Choice, we also need to recognise that many retirees will have secured their pension income through an annuity, and they may not have chosen an inflation-linked option.”
