Retirees see drop in private pension income

The pension freedoms introduced four years ago gave people more choice over how to access their retirement savings. But official figures show that this hasn't translated into higher incomes.

According to retirement income specialist Just Group, the latest Pensioners' Income Series from the Office for National Statistics reveals that overall incomes for pensioners were flat in 2017/18, while income received from workplace or personal pensions has fallen.

It comes after gross income from private pension sources more than doubled in the two decades to 2014/15.

Income from occupational pensions was £148 a week in 2017/18 (down from £160 in 2016/17), the lowest for four years, while weekly income from personal pensions was £19, the lowest for six years and down from £23 in the previous year.

Stephen Lowe, group communications director at Just Group, said: "When George Osborne unveiled his pension 'freedom' plans in the 2014 Budget, he didn't make any promises about it giving people more money.

"I think most people understand from their own banking that in order to have easy access to cash you may need to compromise with lower returns. And the same applies to pension savings.

"Over time, I'm sure there will be clear winners and losers from the reforms but these figures don't show that the average pensioner is winning -- greater pension freedom is not equating to greater pension income."

Lowe said he supports the pension reforms as they allow people to better tailor their savings to their own aspirations, for example by gifting money to children, taking the holiday of a lifetime, or renovating a home.

However, he added: "Pensions are primarily designed to provide income in retirement and money taken early will not be available later.

"While that may be obvious, there are some less obvious knock-on effects from withdrawing money early -- savers may well find they are not able to continue to save as much as they want or need until they fully retire as they become subject to stricter tax rules.

"Our view is that true pension freedom comes when you have enough income secured to pay for the retirement you want -- only then are you free to spend, invest or give away the rest."