Private pensions increase in importance

14 April 2006
The growth of private pensions in the UK has far outstripped the state pension since the late 1970s, according to new research from Clerical Medical.

Even allowing for retail price inflation, the average state pension income has increased by 40 per cent since 1979, whilst private pension income has more than doubled, rising 121 per cent over the same period.

Over the past 25 years, pension income has grown by 97 per cent in real terms. In 1979, the average income per week was £47, compared to £306 per week in 2004.

John Hiew, managing director of Clerical Medical financial services, said: "There has been a significant shift in the balance between pension income sourced from the state and private pensions over the last 25 years.

"Almost 70 per cent of retired households now rely on their private pension arrangements to supplement the cost of living in retirement, compared with 40 per cent in 1979," he added.

State pensions continue to decline in importance in comparison with the total average pensioner's income. Pensions from the state accounted for 53 per cent of elderly income in 1979, compared with only 38 per cent today.

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