About a fifth of pensioners received income-related benefits in the financial year ending 2022, down from a third in 2010, but the proportion of pensioners in the bottom fifth of overall UK incomes has increased since 2010, with weekly pension incomes in 2022 prices almost flatlining in the past decade. 

 

After steep rises in average pension incomes between 1995 and 2010, they barely rose in the 12 years that followed, while the average masks potentially growing pension income disparities as more pensioners live in relative poverty and more are also among the wealthiest in society. 

The proportion of pensioners needing to rely on income-related benefits fell considerably over the 2010 to 2022 period, to 21%, 10 percentage points lower than in 2010, the latest Pensioners’ Income Series by the Department for Work and Pensions shows.  

 

Last year, a slightly larger part of pensioners’ income came from occupational pensions and the state pension than 12 years earlier, possibly explaining some of the fall in income-related benefits claims. Nearly two-thirds (64%) of pensioners had some occupational pension income in 2022, up from 60% in 2010.  

 

The median income pensioners received from occupational pensions was £198 a week, though there are significant peaks in the distribution at the bottom and top of the scale, and 7% received £900 or more per week. Meanwhile, the median state pension income last year was £195 per week. 

 

Worryingly, however, the proportion of pensioners in the bottom fifth of the population’s overall income distribution has increased since 2010 to 16%, with a significant gap between singles (22%) and couples (13%).  

 

 

Separate figures by the DWP found that around 18% of pensioners – about 2m – lived in relative poverty after housing costs in 2019-20, up from 16%, while the percentage living in “material deprivation” remained stable at 6% between 2019 and 2020, after a downward trend since 2014. Despite this, compared against the overall UK population, the DWP said pensioners have been less likely to be in relative or absolute low income after housing costs from around 2005, “due to large reductions in rates of low income for pensioners” until around 2010. 

 

 

The Institute for Fiscal Studies said that an increase in state pension age from 65 to 66 between 2018 and 2020 led to income poverty rates among 65-year-olds more than doubling, adding nearly 100,000 people to this group. 

 

But as more pensioners find themselves at the bottom of the income scale, nearly a fifth of pensioners (19%) are now in the top quintile of the overall income distribution, up from 13% in 1995. 

 

In total, half of all pensioners are in the top half of the overall income distribution. This has stayed more or less unchanged since 2010, after a considerable rise between 1995 and 2010 from 38%. 

 

Looking at regional differences shows that five regions in England had average weekly incomes below the pensioner couple’s UK average of £518, while the South East of England was 15% higher. Single pensioners in London received 11% below the UK average of £246 a week, but in Wales they received 10% more than average. 

 

 

 

 

 

Is inequality starting to show in pensioner incomes?