New research by Legal
& General (L&G) has revealed that pensioners have come to
rely less on the state pension for money to live on.
The report,
353, looks at the intergenerational contract on
a household and family level between the 2012 generation of 35 year
olds and their parents’ generation – the 35 year olds of
1977.
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It found that in 1977,
the state pension provided 53% of the average income of retired
households, with a further 18% coming from company or private
pensions.
However, by 2007-2008,
the two sources of pension income were roughly equal. Retired
households were receiving 36% of their average incomes from company
and state pensions, and 37% from the state pension.
The report states: “A
man or woman who was 35 in 1977 would be 70 in 2012. In those 35
years, the landscape of life after 60 has changed radically.
Looking forward to 2047, when our current 35-year-olds will turn
70, the situation will be even more changed.
Paradigm shift
“Government, financial
services and people have to figure out the paradigm shift to meet
this challenge. The generational contract needs to be withdrawn if
significant problems are to be avoided.”
The L&G report noted
that 35 year olds today tend to have higher income levels but lower
asset levels than their peers of 1977.
It said these changes
are mainly driven by changes in the housing market with house
prices trebling in real terms versus a doubling of salaries, with
knock on impacts in all areas of life on a family and societal
level.
The report involved
2,069 adults being interviewed online from 14-16 September
2012.
