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Latest data from the Norwich Union Retirement Index reveals how pensioners' disposable incomes are being squeezed as household bills rise at a faster rate than pensions.
The most recent quarterly data shows that between Q1 and Q2 2006 average pensioner household income rose by just 0.6% while essential expenditure rose by 3.8% - more than six times as fast.
The index tracks how retirement comfort changes over time by measuring the income that pensioners have left after paying household bills. It has been compiled by the centre for economics and business research (cebr), the economic consultancy and commentator on UK and global economic trends.
Although pensioners' incomes have risen, with the post-tax income of an average pensioner household rising by 31% since 1995, household bills have risen by 58%, leaving pensioners with a declining share of their income to spend on non-essential and luxury items.
The report shows that between August 2005 and August 2006, the price of fuel, gas and electricity rose by 9%, 39% and 27% respectively - costing pensioners an additional £14 a month in total. Overall, pensioner household bills climbed by 8.6% over this period - more than three times the rate of inflation as measured by the government's consumer price index (2.4% October 2006).
The biggest annual increases between August 2005 and August 2006 for pensioner households were: gas bills - up £55; electricity bills - up £41; water charges - up £20; central heating repairs, house maintenance, fuel costs - up by nearly £20; and council tax and domestic rates - up £27.
Dominic Walley, managing economist of cebr, makes the point that even though the government has tried to help pensioners in successive budgets, they generally don't have large equity-based savings and have not benefited as much from the stock market recovery over the past three years. Quite.
05 December 2006 © Moneyextra.com
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