Pensions gap between the rich and poor widened in Eighties up 37% in decade

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The Independent Online
THE RICHEST pensioners are getting richer and the poorest pensioners getting poorer, a new study of the living standards of the elderly reveals today.

The median or mid-point incomes of the richest one-fifth of pensioners grew by nearly 40 per cent during the 1980s, while those of the poorest one-fifth increased only 5 per cent. By the end of the decade, the former enjoyed incomes almost three times larger than those of the latter, compared to two-and-a-half times in 1979.

The study, published by the Joseph Rowntree Foundation, summarises a new analysis of General Household and Family Expenditure survey data for 1979-89 and 1991. Ruth Hancock and Peter Weir, of the Age Concern Institute of Gerontology, King's College, London, found one of the main causes of the widening income gap was the gulf between those who retire on occupational pensions and those on state pensions.

The after-tax incomes for occupational pensioners moved ahead rapidly in the 1980s in real terms compared with the incomes of non- occupational pensioners. In 1979, there was a 13 per cent difference between their median income levels but by 1989 the gap had grown to 50 per cent. Between 1979 and 1991 net income levels actually fell by 6 per cent, after allowing for inflation, among pensioners who had no occupational pension.

Although a growing proportion of those reaching retirement had some occupational pension - 60 per cent in 1991 compared to 55 per cent in 1989, about 40 per cent of men and women of pensionable age in 1991 had no such income with which to supplement their state pension.

However, receipt of an occupational pension does not guarantee a high income. Some occupational pensioners have low incomes while some without occupational pensions have relatively high incomes. Occupational pensioners with incomes below pounds 60 per week tended to have small occupational pensions (on average pounds 5 per week), small savings incomes (averaging 70p per week) and were unlikely to be living with younger people.

In contrast, non-occupational pensioners with incomes greater than pounds 100 were usually living with younger people whose earnings boosted household income; they also had higher than average income from savings.

The Financial Well-being of Elderly People, Social Policy Findings 57; The Homestead, 40 Water End, York YO3 6LP; free.

More Ways than Means: a Guide to Pensioners' Incomes in Great Britain during the 1980s; Ruth Hancock and Peter Weir; Age Concern Institute of Gerontology, King's College, London; pounds 7.

(Graph omitted)