IFS Zooms In: The Economy Are pensioners richer than everyone else?
Mar 20, 2026
Heidi Karjalainen, an IFS researcher on ageing and pension design, and Jonathan Cribb, an IFS pensions and intergenerational economics analyst. They unpack how pensioner incomes and wealth have shifted, what drives retirement income today, and which groups still struggle. They also consider how housing, private pensions and policy choices shape future retirees’ prospects.
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How Pensioners Went From Poorer To Parity
- Pensioner incomes rose from being ~20% below working-age incomes in 1996 to about equal by the early 2010s.
- Policy changes like Pension Credit and the triple lock plus the Great Recession hitting working-age people harder drove the shift.
State Pension Is A Critical Floor For Low Income Pensioners
- Around 45% of average pensioner income comes from the state pension, about 10% from other benefits, and the rest from private pensions and investments.
- The state pension's flat pound amount makes it far more crucial for the poorest pensioners (≈70% of their income) than the richest (≈20%).
New Flat State Pension Versus Older Entitlements
- The new state pension (since 2016) is a flat-rate system worth about £12,000/year and replaces the old basic plus earnings-related top-ups.
- Older retirees remain under the old system, producing larger inequalities among the oldest cohorts.