Pensions gap illustrates the divide in Britain today

Not all pensioners have never had it so good

Updated: 

Older man looking frustrated while reviewing bills

These last 12 months have been littered with contradictions when it comes to how good pensioners have got it.

If you look at the big headlines, those age 55-plus will be able to get their hands on their cash and won't have to be ripped off by poor annuities rates anymore.

And when it comes to those who are already retired, the Office of National Statistics (ONS) proclaimed that they've never had it so good. An ONS report showed that pensioners incomes were on the up while those of working age have seen theirs fall, in part thanks to the government's protection of old age benefits and in part due to stagnant wage growth.

However, many pensioners won't recognise themselves in this 'never had it so good' bracket.

Instantly calculate your pension income options

Recent research by pension consultancy Avacade Future Solutions shows the average pensioner has a pension of just £33,000 which equals an income of just £39.66 a week (when spread over an average of 16 years retirement). Even when added to the maximum state pension of £148.40 it doesn't cover the average pensioner living costs of £199.75.

There are still pensioners sitting on the poverty line, who are genuinely choosing between heating and eating.

Instantly calculate your pension income options

Haves and have-nots

It is just one example of a country increasingly divided between the haves and the have-nots – typified by those who have generous defined benefit (DB) pensions and those who do not.

With the end of DB pension the government has introduced auto-enrolment to try and reduce this inequality and get everyone saving. However, there is a genuine fear that firstly, we are not saving enough, and secondly more people will opt out when their contributions increase automatically or interest rates start to rise and they can no longer afford to save.

While auto-enrolment, along with a flat rate state pension (to be introduced in April 2016) are supposed to be the great levellers of pensions, my concern is that we will all be equal in the fact that we have not saved enough for retirement.

Pensioner poverty for all will be the great leveller, along with longer working lives, for my generation if we are not more conscious of the huge bear trap we are walking into.

Times are tough for some pensioners and we would do well to learn a lesson from them. If we act now, we can prevent ourselves from being the ones choosing between heating and eating in a few decades time.

Read more:

Many retiring below poverty line

Rise of the British pensioner millionaire

Most families in poverty in work

Pensions Expert Says Care Needs to Be Taken with New Scheme