Is the triple lock really needed? This is how wealthy UK’s pensioners are

Happy woman looking away while holding red wine in restaurant. Senior friends standing at porch during social gathering. They are enjoying during get together.
Wealth in the UK has been increasingly going into the hands of the older generation, figures show. (Getty)

Chancellor Jeremy Hunt is expected to maintain the “triple lock” on pensions when he unveils his autumn budget this week.

Hunt and Rishi Sunak are considering imposing up to £60bn in tax rises and spending cuts as they try to meet the fiscal targets they have set.

Campaigners have urged Sunak to stick to the triple lock, which requires state pensions to rise each year in line with the highest of three figures – inflation, average earnings or 2.5%.

Age UK said that as the UK is gripped by a cost of living crisis, scrapping the commitment now would leave some pensioners unable to put the heating on this winter.

But senior Tory backbencher Andrea Leadsom suggested the triple lock could be means tested, as many wealthier OAPs “don’t need it”.

How rich are pensioners in the UK?

More than three million over-65s are living with over £1 million in housing and pension assets, amounting to one in four pensioners, according to research by the Intergenerational Foundation.

That number stood at 846,000 around 2008, showing how retirement wealth has ballooned over the past decade.

This has meant an intergenerational wealth divide has been widened, with income growth for pensioners fast outstripping any real-terms increases in wages.

According to the Office for National Statistics, almost three-quarters of over-65s own their homes outright and nearly 70% have a private pension.

Average homeownership by age, for people born in different decades - IFS chart
Home ownership has become increasingly unattainable as generations go on. (IFS)

Since 2010 a typical older couple has seen their wealth increase from under £400,000 to over £700,000 – amounting to a 75% increase in around 12 years.

In contrast, wages are still failing to keep up with the cost of living. While pay rose by 5.7% in the year to September, this amounts to a decrease of 2.7% when adjusted for inflation.

This inadequate increase in pay, paired with a vast growth in house prices, can help explain why so much wealth has moved into the hands of the older generation, and why the young are increasingly missing out.

Data from the Institute for Fiscal Studies (IFS) shows that half of working adults are renting their homes. The economics research institute says 36% of those born in the 1980s were homeowners by age 30.

This compares to 55% of people born in the 1970s, and 60% of those born in the 1950s and 1960s.

Relative poverty rate by demographic in UK
Poverty among pensioners has fallen dramatically since the 1980s, but it has picked up again in recent years. (IFS)

Intergenerational Foundation co-founder Angus Hanton said the sharp increase in millionaire pensioners lays bare “the stark intergenerational wealth divide opening up between the generations”.

Challenging the government’s stance on protecting pensions, he added: “After a decade of above-inflation increases in the state pension thanks to the triple lock, this analysis raises the question as to whether a 10% increase in the state pension is the fairest way to deal with poverty in Great Britain.”

However, these figures only tell part of the story, as there are many pensioners on low or modest incomes who are struggling to get by and are taking drastic measures to save money.

Millions of pensioners live in poverty

One in five pensioners – more than two million people – are living in relative poverty in the UK, according to a review of national data carried out by the Centre for Ageing Better.

The charity’s annual report was published in March, before the current cost of living crisis really started to bite, so even more older people are likely to have been plunged under the poverty line since.

While it’s true some pensioners are becoming wealthier, the Centre for Ageing Better’s chief executive, Dr Carole Easton, warned that “inequalities within older generations are some of the most extreme in society today”.

File photo dated 19/11/14 of an elderly lady with her electric fire on at home.
Charities warn that many older people may have to choose between food and heating this winter. (PA)

Calling on ministers to commit to a long-term strategy to support ageing people financially, she said: “It’s abundantly clear that not enough is being done to support everyone to age well.

“The government cannot shy away from this. With an ageing population, these problems are becoming more and more urgent.”

Caroline Abrahams, charity director at Age UK, said: “We are hearing some deeply concerning stories from older people about the drastic measures they are taking to save money – for example, preparing coffee with hot water from the tap so they don’t have to boil a kettle, and regularly eating a handful of biscuits rather than preparing a proper meal.

“Our biggest worry is that as the weeks go by and prices for everyday items continue to rise, growing numbers of older people will resort to strategies like these, putting their health and wellbeing at risk.”

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