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NatCen on the Election: How well off are older people?

Posted on 16 May 2017 by Guy Goodwin, Chief Executive
Tags: ageing, ELSA, English Longitudinal Study of Ageing, income and work, NatCen on the Election, general election, pension

For a few years now, economic commentators have been promoting a message on the financial wellbeing of pensioners. It has resulted in media headlines such as “Pensioners have never had it better”, “Pensioners prosper as young lose out”, and “Scrap the triple lock that protects pensions”.

In February, the Resolution Foundation published research suggesting that pensioners are now £20 a week better off than working households, compared with 2001 when they were £70 a week less well off. A BBC Reality Check later highlighted that the calculations had used household income after housing costs (before housing costs, working age households still have higher incomes).

The financial wellbeing of those approaching, or already beyond, the state pension age (in itself moving upwards in years to come) is a “live” issue in this general election campaign, including against the backdrop of needing to find money to invest in areas such as health. The Labour Party has said that it will enshrine in law the “triple lock” commitment - basically, that the state pension should increase in line with average earnings, inflation or 2.5%, whichever is highest.

The English Longitudinal Study of Ageing (ELSA) is a rich source of data on the lives of those people in England aged 50 and over. You can find the latest findings here. One in 3 people are over the age of 50 nowadays (and this number is growing) so understanding this group is important, not just in terms of economic impact but for our society too. For a start, more people over 60 are working than ever before (over a third of 60-69 year olds were either employed or self-employed in the last month).

So are those over 50 well off or relatively so? Perhaps the inevitable answer is that some are and some aren’t. Quoting averages, rather than focusing on distributions, can lead to a misleading picture at a time when there are significant inequalities. So, yes, it may be true that the top 10% of older “benefit units” (see definition in link) have a net (non-pension) wealth of £780,000 or more but it is also true that the bottom 10% possess £1,000 or less in assets. Similarly, the top 10% have net annual income of over £36,000, approaching 5 times of that of the bottom 10%.


What is perhaps telling, however, is how the over 50s report their own financial wellbeing. Almost all over the age of 60 say that they are managing very or quite well or getting by alright financially (in total, 97% of them). This is not true to the same extent for those aged 50-59 where over 10% report some or extreme financial difficulty. Nearly one third of participants aged 65 to 79 had received an inheritance at some point with 11% receiving more than £200,000 and 15% receiving less than £5,000. The amounts correlate with the wealth they already had; basically, those that inherited most were wealthier already.    


ELSA also shows the significant contribution older people can and do make in working, caring and volunteering. Harnessing the skills, knowledge and experience of older people is an important objective for our ageing society. Health and mobility are important if that is to be achieved and it is here that economic and social factors become interwoven. Studies of ELSA data show that less wealthy participants tended to have much higher levels of illnesses, such as angina, cataracts, depression, diabetes and osteoarthritis. Those with the lowest income, poor health and low education are also more likely to be socially isolated.

Our ageing society is inevitably raising questions for policy makers. The affordability of the “triple lock” going forward, and whether pensioners generally need to contribute more and the state less, is one such issue. But the question of whether the wealthier of those of pension age - those who may have gained most through the better years for our economy, house price booms and inheritance - should contribute disproportionately more (and how, whether directly or indirectly, or indeed on their death) is no less sensitive when votes are at stake.


Follow me on Twitter @GuyNatCen

Since 2002, the English Longitudinal Study of Ageing (ELSA) has tracked over 10,000 invited people aged 50 and over, collecting information on their health, finances, relationships and interests. The study is funded by the National Institute of Ageing in the USA and a consortium of Government Departments.

For more information, contact the ELSA team at the National Centre for Social Research.

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