Pensioners' Incomes (Hansard, 25 July 1990)

§ Sir Peter Hordern
To ask the Secretary of State for Social Security what proportion of those receiving state retirement pensions also receive other incomes; and what were the average earnings of pensioners in each of the last 10 years.

§ Mrs. Gillian Shephard
The last available information shows that in 1987 more than 86 per cent. of pensioners had income from sources other than their retirement pension. The most recent figures of the average earnings of pensioners are set out in the table:

Earnings¹ £

1979 63.00

1980 62.70

1981 67.30

Net income at 1987 prices Single pensioner units

cash change: percentage change:

1979 1983 1987 1979–87 1983–87 1979–87 1983–87

Lowest 35.49 40.98 41.02 5.52 0.04 15.6 0.1

2 39.79 46.06 47.12 7.32 1.06 18.4 2.3

3 43.36 50.69 51.90 8.54 1.22 19.7 2.4

4 46.87 54.78 57.19 10.33 2.41 22.0 4.4

5 49.73 59.10 61.29 11.56 2.19 23.2 3.7

6 52.55 61.87 65.25 12.70 3.38 24.2 5.5

7 55.97 66.01 69.97 13.99 3.96 25.0 6.0

8 61.40 72.53 76.55 15.14 4.02 24.7 5.5

9 72.59 87.42 93.32 20.73 5.90 28.6 6.8

Highest 103.24 127.72 143.90 40.66 16.18 39.4 12.7

Overall mean 57.74 69.22 75.10 17.36 5.87 30.1 8.5

Note: Medians have been used to calculate the incomes by deciles to minimise statistical distortion at either end of the income distribution. Means have been used to calculate overall average incomes.

Net Income at 1987 Prices Married Pensioner Units

cash change: per cent change:

Decile 1979 1983 1987 1979–87 1983–87 1979–87 1983–87

Lowest 62.67 70.60 71.58 8.91 0.98 14.2 1.4

2 70.10 79.59 83.08 12.98 3.49 18.5 4.4

3 74.31 85.76 90.15 15.84 4.39 21.3 5.1

4 79.12 90.51 97.50 18.39 7.00 23.2 7.7

5 85.63 95.98 106.41 20.78 10.43 24.3 10.9

6 93.87 105.04 116.98 23.11 11.94 24.6 11.4

7 103.25 115.61 132.17 28.92 16.56 28.0 14.3

8 122.83 131.99 153.09 30.26 21.10 24.6 16.0

9 145.76 166.31 190.06 44.30 23.75 30.4 14.3

Highest 208.42 252.61 312.62 104.20 60.01 50.0 23.8

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Earnings¹ £

1982 60.40

1983 76.10

1984 72.50

1985 69.10

1986 68.70

1987 84.26

¹ Average is for those individuals actually receiving earnings income.

Source: Family Expenditure Survey.

§ Mr. Gregory
To ask the Secretary of State for Social Security what is his estimate of the latest trend in pensioners' real incomes since 1979; and if he will make a statement.

§ Mrs. Gillian Shephard
The average total net income of pensioners increased by over 31 per cent. in real terms between 1979 and 1987. This compares very favourably with the 3 per cent. real terms increase between 1974 and 1979.
Source: Family Expenditure Survey.

§ Mr. Andrew Bowden
To ask the Secretary of State for Social Security (1) if he will list the cash and percentage changes in real income between(a) 1979 and 1987 and (b) 1983 and 1987 for all pensioners units, single pensioners and pensioner couples, in each case breaking down the figures by decile group;
(2) if he will list (a) the percentage and (b) the cash changes in pensioners' incomes by decile group for the period 1983 to 1987.

§ Mrs. Gillian Shephard
[holding answer 20 July 1990]: The information requested is in the tables.
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cash change: per cent change:

Decile 1979 1983 1987 1979–87 1983–87 1979–87 1983–87

Overall Mean 107.32 121.57 140.67 33.35 19.10 31.1 15.7

^* Medians have been used to calculate the incomes by deciles to minimise statistical distortion at either end of the income distribution. Means have been used to calculate overall average incomes.

Net Income at 1987 Prices All Pensioner Units

cash change: per cent change:

Decile 1979 1983 1987 1979–87 1983–87 1979–87 1983–87

Lowest 36.39 42.57 42.67 6.28 0.10 17.3 0.2

2 42.93 50.44 51.36 8.43 0.92 19.6 1.8

3 48.15 57.26 59.20 11.05 1.94 23.0 3.4

4 52.64 62.40 65.40 12.76 3.00 24.2 4.8

5 58.66 68.69 72.27 13.61 3.58 23.2 5.2

6 66.60 78.47 83.02 16.43 4.55 24.7 5.8

7 75.58 88.37 94.65 19.07 6.28 25.2 7.1

8 87.23 99.95 110.84 23.60 10.89 27.1 10.9

9 107.33 121.23 139.71 32.38 18.48 30.2 15.2

Highest 159.93 186.66 219.77 59.84 33.11 37.4 17.7

Overall Mean 75.92 88.96 99.88 23.96 10.92 31.6 12.3

^* Medians have been used to calculate the incomes by deciles to minimise statistical distortion at either end of the income distribution. Means have been used to calculate overall average incomes.

§ Mr. Meacher
To ask the Secretary of State for Social Security (1), pursuant to his answer to the hon. Member for Birmingham, Northfield (Mr. King) of 20 February,Official Report, columns 675–77, on pensioners' incomes, if he will give the same analysis for each decile or quintile of pensioners' incomes, and if he will include income from the state earnings-related pension scheme as a separate item;
(2) if he will indicate the breakdown of the 17 per cent. real increase in the net income of the lowest quintile of pensioners since 1979; if he will indicate what percentage is due to the (a) basic state retirement pension, (b)

Table 1 Pensioners' Incomes

1974 1979 1987 Real terms increase 1974–79 Per cent. Real terms increase 1979–87 Per cent.

Lowest quintile

Total social security benefits 32.50 37.50 42.80 15 14

Occupational pensions 0.50 0.40 1.66 -11 295

Savings income 1.30 1.30 2.70 -1 112

Earnings 0.60 0.50 0.20 -27 -47

Total gross income 34.90 39.60 47.50 14 20

Total net income 34.80 39.30 46.70 13 19

2nd quintile

Total social security benefits 41.30 45.90 55.10 11 20

Occupational pensions 1.80 2.50 4.30 38 74

Savings income 2.70 2.30 3.80 -16 67

Earnings 1.00 0.30 0.50 -71 71

Total gross income 46.80 51.00 63.70 9 25

Total net income 46.40 50.50 62.30 9 24

3rd quintile

Total social security benefits 48.30 51.70 62.60 7 21

Occupational pensions 5.40 5.80 10.40 7 81

Savings income 4.40 4.50 6.10 1 36

Earnings 3.50 2.50 1.40 -28 -43

Total gross income 61.60 64.50 80.50 5 25

Total net income 59.90 62.70 77.70 5 24

4th quintile

Total social security benefits 54.80 61.10 71.10 12 16

Occupational pensions 12.20 11.70 21.70 -4 86

Savings income 7.30 5.50 13.10 -25 137

Earnings 8.40 6.70 3.90 -17 -44

Total gross income 82.70 85.30 109.80 3 29

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SERPS, (c) occupational pensions, (d) savings and interest, (e) increased take-up of disability benefits and (f) other sources of income; and if he will give a similar breakdown for each of the four quintiles.

§ Mrs. Gillian Shephard
[holding answer 8 March 1990]:The information requested is set out in the tables. The source of the data is the family expenditure survey. It is not possible from this source to identify payments of additional pension from the state earnings-related pension scheme.
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1974 1979 1987 Real terms increase 1974–79 Per cent. Real terms increase 1979–87 Per cent.

Total net income 78.70 81.70 103.30 4 27

Highest quintile

Total social security benefits 47.90 56.60 64.50 18 14

Occupational pensions 39.00 45.90 78.40 18 71

Savings income 38.00 31.70 78.60 -17 148

Earnings 54.50 39.50 33.30 -28 -16

Total gross income 179.50 173.60 254.80 -3 47

Total net income 150.00 145.60 209.60 -2 44

Table 2: Pensioners' income from savings and occupational pensions, 1974, 1979 and 1987 Pensioners with savings income

Percentage with savings income Average amount received (£s per week at 1988 prices)

1974 1979 1987 1974 1979 1987

Quintile:

Lowest 38 45 65 3.4 2.8 4.2

2 45 51 61 6.0 4.5 6.3

3 50 63 66 8.9 7.1 9.2

4 53 68 80 13.8 8.1 16.4

Highest 76 83 95 49.9 38.3 82.9

All 53 62 73 20.5 14.6 28.4

Pensioners with occupational pension

Percentage with occupational pension Average amount received (£s per week at 1989 prices)

1974 1979 1987 1974 1979 1987

Quintile:

Lowest 7 8 23 6.4 5.2 7.1

2 20 27 34 9.2 9.2 12.6

3 36 41 53 14.8 14.1 19.6

4 53 60 68 22.9 19.6 32.0

Highest 58 70 81 67.0 65.5 96.8

All 35 41 52 33.7 32.1 44.8

Table 3: Pensioners' Incomes by Quintile 1987 prices

RP, Supp. benefit and housing benefit Occupational pension Investment income Other sources Total gross Total net

1st Quintile 1979 36.50 0.40 1.30 1.40 39.60 39.30

1987 41.90 1.70 2.70 1.20 47.50 46.70

Real increase 1979–87 (per cent.) 15 295 112 -15 20 19

Proportion of total net increase (per cent.) 72 17 20 -3 105 100

2nd Quintile 1979 44.40 2.50 2.30 1.80 50.90 50.50

1987 54.00 4.30 3.80 1.60 63.70 62.30

Real increase 1979–87 (per cent.) 22 74 67 -13 25 24

Proportion of total net increase (per cent.) 81 16 13 -2 108 100

3rd Quintile 1979 49.20 5.80 4.50 5.00 64.50 62.70

1987 58.60 10.40 6.10 5.40 80.50 77.70

Real increase 1979–87 (per cent.) 19 81 36 8 25 24

Proportion of total net increase (per cent.) 63 31 11 3 107 100

4th Quintile 1979 57.10 11.70 5.50 11.00 85.30 81.70

1987 63.10 21.70 13.10 11.90 109.80 103.30

Real increase 1979–87 (per cent.) 11 85 137 8 29 26

Proportion of total net increase (per cent.) 28 46 35 4 113 100

5th Quintile 1979 52.70 45.90 31.70 43.40 173.60 145.60

1987 57.80 78.40 78.60 40.00 254.80 209.60

Real increase 1979–87 (per cent.) 10 71 148 -8 47 44

Proportion of total net increase (per cent.) 8 51 73 5 127 100

Overall 1979 48.00 13.20 9.00 12.50 82.80 75.90

1987 55.10 23.30 20.90 12.00 111.20 99.90

Real increase 1979–87 (per cent.) 15 76 131 -4 34 32

Proportion of total net increase (per cent.) 30 42 49 -2 119 100

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Source: Family Expenditure Survey.
All cash figures are £s per week at 1987 prices.
In common with all other surveys, the family expenditure survey draws information from a random sample of the population. This means that the FES will occasionally include some individuals whose weekly incomes are considerably higher or lower than those of the remainder of their quintile. The unrepresentative income of such individuals may cause wide swings in the figures particularly in year-to-year comparisons and when disaggregated into quintiles. In general, when viewed over the long term, the data provide a reliable indication of the movement in average weekly income.

Net income at 1987 prices Single pensioner units
			cash change:	percentage change:
	1979	1983	1987	1979–87	1983–87	1979–87	1983–87
Lowest	35.49	40.98	41.02	5.52	0.04	15.6	0.1
2	39.79	46.06	47.12	7.32	1.06	18.4	2.3
3	43.36	50.69	51.90	8.54	1.22	19.7	2.4
4	46.87	54.78	57.19	10.33	2.41	22.0	4.4
5	49.73	59.10	61.29	11.56	2.19	23.2	3.7
6	52.55	61.87	65.25	12.70	3.38	24.2	5.5
7	55.97	66.01	69.97	13.99	3.96	25.0	6.0
8	61.40	72.53	76.55	15.14	4.02	24.7	5.5
9	72.59	87.42	93.32	20.73	5.90	28.6	6.8
Highest	103.24	127.72	143.90	40.66	16.18	39.4	12.7
Overall mean	57.74	69.22	75.10	17.36	5.87	30.1	8.5

Net Income at 1987 Prices Married Pensioner Units
				cash change:	per cent change:
Decile	1979	1983	1987	1979–87	1983–87	1979–87	1983–87
Lowest	62.67	70.60	71.58	8.91	0.98	14.2	1.4
2	70.10	79.59	83.08	12.98	3.49	18.5	4.4
3	74.31	85.76	90.15	15.84	4.39	21.3	5.1
4	79.12	90.51	97.50	18.39	7.00	23.2	7.7
5	85.63	95.98	106.41	20.78	10.43	24.3	10.9
6	93.87	105.04	116.98	23.11	11.94	24.6	11.4
7	103.25	115.61	132.17	28.92	16.56	28.0	14.3
8	122.83	131.99	153.09	30.26	21.10	24.6	16.0
9	145.76	166.31	190.06	44.30	23.75	30.4	14.3
Highest	208.42	252.61	312.62	104.20	60.01	50.0	23.8

	Earnings¹ £
1982	60.40
1983	76.10
1984	72.50
1985	69.10
1986	68.70
1987	84.26
¹ Average is for those individuals actually receiving earnings income.

Net Income at 1987 Prices All Pensioner Units
				cash change:	per cent change:
Decile	1979	1983	1987	1979–87	1983–87	1979–87	1983–87
Lowest	36.39	42.57	42.67	6.28	0.10	17.3	0.2
2	42.93	50.44	51.36	8.43	0.92	19.6	1.8
3	48.15	57.26	59.20	11.05	1.94	23.0	3.4
4	52.64	62.40	65.40	12.76	3.00	24.2	4.8
5	58.66	68.69	72.27	13.61	3.58	23.2	5.2
6	66.60	78.47	83.02	16.43	4.55	24.7	5.8
7	75.58	88.37	94.65	19.07	6.28	25.2	7.1
8	87.23	99.95	110.84	23.60	10.89	27.1	10.9
9	107.33	121.23	139.71	32.38	18.48	30.2	15.2
Highest	159.93	186.66	219.77	59.84	33.11	37.4	17.7
Overall Mean	75.92	88.96	99.88	23.96	10.92	31.6	12.3
^* Medians have been used to calculate the incomes by deciles to minimise statistical distortion at either end of the income distribution. Means have been used to calculate overall average incomes.

Table 1 Pensioners' Incomes
	1974	1979	1987	Real terms increase 1974–79 Per cent.	Real terms increase 1979–87 Per cent.
Lowest quintile
Total social security benefits	32.50	37.50	42.80	15	14
Occupational pensions	0.50	0.40	1.66	-11	295
Savings income	1.30	1.30	2.70	-1	112
Earnings	0.60	0.50	0.20	-27	-47
Total gross income	34.90	39.60	47.50	14	20
Total net income	34.80	39.30	46.70	13	19
2nd quintile
Total social security benefits	41.30	45.90	55.10	11	20
Occupational pensions	1.80	2.50	4.30	38	74
Savings income	2.70	2.30	3.80	-16	67
Earnings	1.00	0.30	0.50	-71	71
Total gross income	46.80	51.00	63.70	9	25
Total net income	46.40	50.50	62.30	9	24
3rd quintile
Total social security benefits	48.30	51.70	62.60	7	21
Occupational pensions	5.40	5.80	10.40	7	81
Savings income	4.40	4.50	6.10	1	36
Earnings	3.50	2.50	1.40	-28	-43
Total gross income	61.60	64.50	80.50	5	25
Total net income	59.90	62.70	77.70	5	24
4th quintile
Total social security benefits	54.80	61.10	71.10	12	16
Occupational pensions	12.20	11.70	21.70	-4	86
Savings income	7.30	5.50	13.10	-25	137
Earnings	8.40	6.70	3.90	-17	-44
Total gross income	82.70	85.30	109.80	3	29

Table 2: Pensioners' income from savings and occupational pensions, 1974, 1979 and 1987 Pensioners with savings income
	Percentage with savings income	Average amount received (£s per week at 1988 prices)
	1974	1979	1987	1974	1979	1987
Quintile:
Lowest	38	45	65	3.4	2.8	4.2
2	45	51	61	6.0	4.5	6.3
3	50	63	66	8.9	7.1	9.2
4	53	68	80	13.8	8.1	16.4
Highest	76	83	95	49.9	38.3	82.9
All	53	62	73	20.5	14.6	28.4

Pensioners with occupational pension
	Percentage with occupational pension	Average amount received (£s per week at 1989 prices)
	1974	1979	1987	1974	1979	1987
Quintile:
Lowest	7	8	23	6.4	5.2	7.1
2	20	27	34	9.2	9.2	12.6
3	36	41	53	14.8	14.1	19.6
4	53	60	68	22.9	19.6	32.0
Highest	58	70	81	67.0	65.5	96.8
All	35	41	52	33.7	32.1	44.8

Table 3: Pensioners' Incomes by Quintile 1987 prices
	RP, Supp. benefit and housing benefit	Occupational pension	Investment income	Other sources	Total gross	Total net
1st Quintile 1979	36.50	0.40	1.30	1.40	39.60	39.30
1987	41.90	1.70	2.70	1.20	47.50	46.70
Real increase 1979–87 (per cent.)	15	295	112	-15	20	19
Proportion of total net increase (per cent.)	72	17	20	-3	105	100
2nd Quintile 1979	44.40	2.50	2.30	1.80	50.90	50.50
1987	54.00	4.30	3.80	1.60	63.70	62.30
Real increase 1979–87 (per cent.)	22	74	67	-13	25	24
Proportion of total net increase (per cent.)	81	16	13	-2	108	100
3rd Quintile 1979	49.20	5.80	4.50	5.00	64.50	62.70
1987	58.60	10.40	6.10	5.40	80.50	77.70
Real increase 1979–87 (per cent.)	19	81	36	8	25	24
Proportion of total net increase (per cent.)	63	31	11	3	107	100
4th Quintile 1979	57.10	11.70	5.50	11.00	85.30	81.70
1987	63.10	21.70	13.10	11.90	109.80	103.30
Real increase 1979–87 (per cent.)	11	85	137	8	29	26
Proportion of total net increase (per cent.)	28	46	35	4	113	100
5th Quintile 1979	52.70	45.90	31.70	43.40	173.60	145.60
1987	57.80	78.40	78.60	40.00	254.80	209.60
Real increase 1979–87 (per cent.)	10	71	148	-8	47	44
Proportion of total net increase (per cent.)	8	51	73	5	127	100
Overall 1979	48.00	13.20	9.00	12.50	82.80	75.90
1987	55.10	23.30	20.90	12.00	111.20	99.90
Real increase 1979–87 (per cent.)	15	76	131	-4	34	32
Proportion of total net increase (per cent.)	30	42	49	-2	119	100