NOT SO long ago a report from the Resolution Foundation, an independent think-tank that aims to improve the standard of living of low and middle-earning families, highlighted that the average pensioner household is now better off than the average working-age one.

The report, As Time Goes By, found that pensioner incomes had grown by 30 per cent since 2001, largely as a result of many over 65s owning their own home, receiving a generous private pension and also continuing to work. The net effect was that pensioner households now have £20 a week more in income than working-age ones.

However, while this could be taken as evidence of an intergenerational divide that sees the older population bask in a retirement paid for by generous employer-funded final salary pensions while the younger one toils for low pay while also having to save for their own retirement, it does not tell the whole story.

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Indeed, as the Government’s latest Pensioners’ Income Series has highlighted, while the average income of all UK pensioners has increased from £258 a week in 2005/06 to £296 in 2015/16, there is a wide disparity within that group, with older pensioners typically having lower incomes than younger ones.

“Both recently retired pensioners and pensioners where the head [of the household] was under 75 had higher average incomes than those where the head was 75 or over,” the report said.

“In both 2005/06 and 2015/16 the weekly average income of pensioners who were 75 or over was 75 per cent of that of under 75s. The ratio of older to younger pensioner incomes has remained constant.

“The income difference between these age groups is not surprising. Firstly, younger pensioners were more likely to be in work, reflecting mean gross income from earnings of £134 per week where the head is under 75.

“Secondly, younger pensioners were more likely to have benefited from the peak of occupational scheme savings in the late 1960s.”

Steven Cameron, pensions director at insurer Aegon, said the data backs up the notion that “today’s retirees are set to be the wealthiest we’ve ever seen” although he stressed that growing incomes for the recently retired does “not necessarily mean their retirement pot is in better health than those that have gone before them”.

“Retirement is becoming more of a phase, and many are choosing to continue to work beyond retirement age to supplement income from pensions,” he said.

For Steve Webb, director of policy at insurer Royal London and a former Liberal Democrat MP who served as pensions minister in the Coalition Government, some of the other figures published in the report are “startling” because they “challenge the notion that pensioners will inevitably get richer and richer”.

“Pensioner incomes in 2015/16 were no higher than a year earlier and newly retired pensioners were actually less well off than the year before,” he said.

“In addition, more than half of all pensioners get the majority of their income from state pensions and benefits.

“While there are clearly some pensioners who enjoy good company pensions and have benefited from house price inflation, there are clearly also many who are not in such a fortunate position.”

Jamie Jenkins, head of pensions strategy at pensions giant Standard Life, agreed, pointing out that it is incorrect to assume that all current pensioners are living off large final salary benefits.

“The reality is that some baby boomers may have been in a nice final salary scheme if they worked for a large employer, but if you worked for a small employer you probably have nothing,” he said.

“Auto-enrolment [which has required all employers to enrol their staff into a contributory pension scheme] has shown that because the vast majority of employers didn’t have any arrangements in place. What you’ve got with babyboomers is haves and have nots.”

Although those approaching retirement age with no savings may assume it is too late to start building up a pension pot, Jenkins said that any amount that can be used to supplement the state pension is worth putting aside.

“There’s a lost generation of people who weren’t in a final salary scheme and didn’t save privately who are now getting picked up by auto-enrolment,” he said.

“There is evidence of older people opting out [of auto-enrolment] on the basis that it’s too late. It might be too late to build up an adequate pension pot, but if you can save £20,000 that’s not unimportant.”

For the younger generation, being automatically enrolled in a workplace pension takes away some of the pressure of having to think about saving for retirement.

However, with the Government requiring minimum contributions of just two per cent of salary at the moment, with the total rising to eight per cent - three of which will come from employers - in 2019, the likelihood that they will save enough to fund a comfortable retirement on the minimum alone is slim.

The implication is clear: if you want to live well when you reach retirement age you better start boosting your savings now. It sounds simple, but when you have no idea how long you will live or how healthy you will be in later life, in reality it is anything but.

“The real challenge is determining how much money people need to save to meet their varying income needs at different stages of the retirement journey,” said Cameron.