Government estimates of the number of pensioners with earnings over £50,000 a year have risen from 418,000 in 2016/17 to an estimated 474,000 in 2018/19 but will likely ‘deteriorate significantly’ in the years ahead.
Defining pensioners as those over State Pension Age, the figures, released in response to a question from former pensioner minister Baroness Altmann, also revealed that those paying 40% tax had dropped over the same time period (from 537k to 508k), while those paying 45% tax had increased (from 34k to 37k).
Government estimates the pensioner population was 12.3 million in 2016/2017 and 12m in 2081/2019.
While the current generation of wealthy retirees include the post-war ‘baby boomers’, who were more likely to benefit from rising house prices and generous defined benefit pensions, future retirees will find it hard to even match this level of income.
Tom Selby, senior analyst at AJ Bell, comments that the baby boomers could benefit further “from Prime Minister-in-waiting Boris Johnson’s proposal to increase the higher-rate tax threshold to £80,000 as they will not be affected by corresponding plans to raise the National Insurance upper earnings limit.
“Of course, it is possible a future Government will decide to levy NI on pensioners’ incomes, although this would be extremely unpopular among a section of society that tends to hold significant influence at general elections.
However, he points out also that over the longer-term, the proportion of people enjoying retirement incomes at this level “is likely to deteriorate significantly, with the responsibility for pensions provision shifting from employers and the state to individuals.
“In this environment even diligent, high-income savers will struggle to generate a retirement income anywhere near £50,000.”
Estimates of the number of pensioners who had an annual income above £50,000 as:
Numbers: thousands
