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Pensioners: Income

Work and Pensions written question – answered on 14th December 2011.

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Photo of Ben Gummer Ben Gummer Conservative, Ipswich

To ask the Secretary of State for Work and Pensions what recent estimate has been made of the number of pensioners whose incomes exceed the average income of an individual in employment.

Photo of Steve Webb Steve Webb The Minister of State, Department for Work and Pensions

Table 1 shows the number of pensioners living in a household with an equivalised income greater than the median equivalised income for households where at least one member is in some form of employment (this could either be full- or part-time employment).

Results both Before Housing Costs and After Housing Costs have been provided. For Before Housing Costs, housing costs are not deducted from income, while for After Housing Costs they are.

Figures have been rounded to the nearest 100,000 pensioners and proportions rounded to the nearest percentage point.

Table 1: The number of pensioners living in households with an income greater than the median household income where at least one member of the household is employed, United Kingdom, 2009-10
Number of pensioners (million) Proportion of pensioners (%)
Before Housing Costs 3.3 29
After Housing Costs 4.1 36
Notes: 1. These statistics are based on the Households Below Average Income (HBAI) series, sourced from the Family Resources Survey (FRS). This uses disposable household income, adjusted using modified OECD equivalisation factors for household size and composition, as an income measure as a proxy for standard of living. 2. Net disposable incomes have been used to answer the question. This includes earnings from employment and self-employment, state support, income from occupational and private pensions, investment income and other sources. Income tax payments, national insurance contributions, council tax/domestic rates and some other payments are deducted from both income measures. In addition a measure of housing costs are also deducted from the After Housing Cost incomes. 3. Analysis has been carried out based on equivalised household incomes. This takes an adult couple with no children as the reference point. For example, the process of equivalisation would adjust the income of a single pensioner upwards, so that we can use income to directly compare their standard of living with a working-age couple without children. 4. The median equivalised income for households where at least one member of the household is employed is; £485 per week Before Housing Costs and £424 per week After Housing Costs. 5. All estimates are based on survey data and are therefore subject to a degree of uncertainty. Small differences should be treated with caution as these will be affected by sampling error and variability in non-response. 6. The reference period for HBAI figures is the financial year. 7. Measures for pensioners are generally on an After Housing Costs basis. This is because pensioners are far more likely to own their homes outright and so receive value from housing, without having to pay for rent or mortgage payments out of their current income. So for assessing pensioner poverty a Before Housing Costs basis does not provide a good comparison of living standards.

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