Skip to main content

Are pensioner’s really earning more than working families? 

Hand 588982 1920

The above title is the sound bite currently making its way around the media. While it may not be ‘fake news’, it is a gross over-simplification as it compares the averages of two heterogeneous age cohorts.

Behind the numbers

The baby boomers who have recently retired have benefited from generous defined benefit pensions, the large rise in house prices, the absence of university fees, and the increase in the stock market during their lifetimes. These young pensioners may also still be working, which further increases their incomes.

On the other hand, older pensioners will have received less benefit from these effects, leading to much lower incomes. The considerable inequality between age cohorts of pensioners is masked by the use of overall averages. There is also the inequality between pensioners within the same cohort, e.g. those who retired from well paid jobs with a good private pension, and those who received a much lower income and have no private pension.

The problem is not rich pensioners, but a young generation that is relatively poor, due to the effects of austerity and the absence of affordable housing.

‘Generation rent’ will get less benefit from rising house prices, must pay university fees, and are only offered defined contribution pensions by private sector employers. However, some members of ‘generation rent’ will be supported in various ways by their older (richer) relatives, leading to a more equitable outcome than the statistics indicate.

Professor Charles Sutcliffe

Professor of Finance
Published 13 February 2017

You might also like

To Grexit or not to Grexit?

7 February 2017
There has been some discussion in the news lately in respect to the possibility of Greece exiting the Euro (Grexit).

ICMA Centre Student Commended

25 June 2007
ICMA Centre student, Afua Addae (pictured here with fellow student Aleksander Petreski), who studied the MSc in Financial Risk Management, has received the commendation of runner-up for the Eurekahedge prize for the best paper on hedge funds after working on a major project based on Eurekahedge data for her MSc. After completing a BSc degree in Chemical Engineering in Ghana, Afua moved to the UK and decided to study at the ICMA Centre after working for a year and a half with Nationwide Building Society, UK. She will graduate in July 2007 with a merit. During her MSc study she worked part time as a research consultant with Lepus Management Consultancy, a risk management consultancy in London where her researches on ?Basel II Implementation: Lessons Learnt from the First Round of IRB Applications', ?The Risk and Regulatory Environment in Commodity Trading' and ?Rogue Trading', have been published on Lepus' Risk Monthly Reports.

Two undergraduate high flyers receive commemorative award

30 May 2008