State pensions are getting a lot more generous, but things are getting worse for those waiting to retire as the retirement age keeps moving away
State pensions are getting a lot more generous, but for the people waiting to retire things are getting worse as the retirement age keeps moving further away.
The Government has spent the past few years boosting pensions payouts while hammering people on other benefits.
The decision to keep raising state pensions payouts by at least 2.5% a year, and sometimes a fair bit more, means people can now claim £168.60 a week within five weeks of qualifying – along with a host of other benefits reserved for those past 65.
But poorer families who haven’t retired yet aren’t benefiting from this generosity – and that means the gap between the worst off pensioners and those not retired yet is growing fast.
According to the Institute for Fiscal Studies (IFS), in 1999 the poorest fifth of the population aged up to five years above the state pension age had an average income 17% higher than those in the poorest fifth who were due to reach state pension age within the next five years.
But by 2017 the gap had grown to an astonishing 70%.
Worse, since 1999 the retirement age for women has risen from 60 to 65 – delaying the point people qualify for the state pension – while the state pension age for both men and women is currently rising to 66 and beyond for those yet to retire.
IFS deputy director Carl Emmerson said that pushing up the state pension age as longevity increases makes sense. But there is a large – and growing – difference in support that the state makes available to low income households who are just below the state pension age and those who are just above it.
The research also found that 60 to 74-year-olds on middle incomes have total incomes more than 60% higher than their predecessors in the mid-1990s, as private pensions and earnings have grown.
The IFS said employment rates for older men and women are likely to continue rising as life expectancy increases and future generations have less generous pensions to rely on.