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Post retirement workers pay £8.6bn in income tax

24 June 2018

The UK’s pensioner workforce generates £8.6bn a year in income tax for the economy, analysis from Aegon has shown.

There are currently 8.7m pensioner households in the UK made up of around 12.8m people.

Over the last two decades, the percentage of pensioner households continuing to work has increased from 12% in 1997/98 to 17% today. This upward trend has been matched by a rise in average earnings, Aegon said.

Even after taking account of inflation, pensioner couples have seen their weekly earnings increase 30% over the same period, rising from £410 in 1997/98 to £534 today, while single pensioners have experienced a 71% increase from £199 to £340 per week.

Commenting on the figures, Aegon pensions director Steven Cameron said: “Gone are the days when reaching state pension age meant a total end to work. Many people are choosing to keep working and earning, perhaps by cutting back gradually on the amount of work they do, even once they’ve started taking their pension. These people are contributing significant amounts to the nation’s finances through the tax they generate while also helping the broader economy through their work.”

Cameron said that in a “golden era” for pensioners, with many benefiting from general final salary schemes and increases to the state pension, it did not come as a surprise that many pensioners were benefitting from decent incomes. However, he cautioned that with final salary pensions and inflation busting increases to the state pension unlikely to carry on indefinitely, “it’s important that society is changing with more people able to choose to work past traditional retirement ages.”