If people were ever in doubt of the value of investing in a workplace pension then new statistics from the Office for National Statistics should change their mind. Amongst the raft of statistics in their new report is the fact that retired households' disposable income is 1.6 times higher with private pensions. The report shows that the disposable income of retired households with a private pension by the financial year end of 2016 was £27,800, which compares to households without a private pension receiving an income of just £17,200. The report also shows that 96% of retired household had a disposable income of over £10,000 by the end of the 2016 financial year, a significant rise of over 21% since 1977.
Commenting on the results, former pensions minister Steve Webb said that it was good to see the increase in disposable income for retirees thanks to private pensions, but work still needs to be done to ensure that the next generation of retirees also ensure they have a comfortable retirement.
"The big growth in pensioner incomes is driven by people retiring with good company pensions. But today's workers are not building up pensions that are anywhere near as generous. While pensioner poverty rates have dropped sharply, this could go into reverse if today's workers do not build up their own pensions at a much faster rate than they are at present."
The former head of The Pensions Advisory Service Malcolm McLean agrees and says that more work is to be done, especially trying to find ways of involving the self-employed in the auto enrolment process.
"Although the annual disposable income over the last 40 years is impressively large, there is still concern about the levels of income inequality between individual households. There is still much to do to maintain progress, and avoid slipping backwards, in relation to retired household incomes."
"It is important that today's workers are encouraged to take advantage of being auto-enrolled into a workplace pension scheme and start saving at the earliest possible ages. As a matter of urgency, we must continue to strive to find a way to bring the self-employed into the process."
"If the pensioners of tomorrow are to going to catch up with, and at least match, those of today, there can be no room for complacency in addressing these issues."