Prudential: the average retired UK household benefits by as much as £17,500 a year from direct and indirect financial support

  • Average annual pensioner benefits and concessions worth £17,500
  • Pensioners say OAP discounts save them more than £1,000 a year on discretionary spending
  • More than one in three could not afford a trip to the dentist or optician if charged the full going rate

LONDON, 01-Aug-2016 — /EuropaWire/ — More than half (51 per cent) of pensioners would have to make significant alterations to their lifestyles if it wasn’t for the range of benefits, discounts and concessions they currently receive, according to new research and analysis by Prudential1 . In fact, the average retired household benefits by as much as £17,500 a year from direct and indirect financial support.

Following on from its revelation earlier this year that one in seven people retiring in 2016 will be reliant on the State Pension, Prudential has delved further into how much pensioners rely on government backed benefits and discounts available on discretionary spending to maintain their quality of life.

The latest available ONS data2 for the 2014-15 tax year shows that, on average, retired households received a total of £11,227 a year in cash benefits from the State, including £8,954 from the State Pension and £2,273 in additional benefits such as housing benefit and attendance allowance.

The other major piece of the jigsaw of financial support received by pensioners is made up of benefits in kind such as healthcare and travel subsidies. According to ONS figures, benefits in kind are worth £6,274 each year to the average pensioner.

Prudential’s research also looked at the concessions and perks pensioners receive on discretionary spending such as event tickets and entry fees. The results show that the average pensioner estimates they benefit to the tune of an additional £88 a month – or just over £1,000 a year.

More than a third (36 per cent) of pensioners said they would not be able to afford dental treatment or have eye tests without OAP state subsidies, while three in 10 (30 per cent) feel that public transport would be unaffordable without pensioner concessions. Nearly one in four (23 per cent) said that days out would be out of the question if OAP discounts were not available, and just under one in 10 (nine per cent) would not be able to afford a TV license.

Vince Smith-Hughes, a retirement income expert at Prudential, said: “With the ONS estimating that the typical household takes a 40 per cent drop in income on retirement, it is understandable that pensioners come to rely on concessions and discounts to maintain their quality of life.

“However, much of the direct and indirect support received by pensioners is at the discretion of the State or other organisations. With the average retirement now lasting 20 years, the debate on the affordability of universal support for the retired will continue, and pensioners may find the supplements to their income being cut in the future.

“For most people looking to be able to maintain their quality of life in retirement, the best approach is to save as much as possible as early as possible during their working life. And when the time comes to make big decisions about retirement saving and taking an income from a pension, most should benefit from a consultation with a professional financial adviser or seeking free guidance from the Pension Advisory Service or Age UK.”

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Media enquiries
Louise Wilkie 020 7004 8280 louise.wilkie@prudential.co.uk Tony Hannon 020 7004 8079 tony.hannon@prudential.co.uk

Follow us on Twitter @PruUKpress Radio interviews via ISDN and various smartphone apps can be arranged on request Notes to editors: 1 Survey conducted by Consumer Intelligence on behalf of Prudential in April 2016 among 481 retired British adults, of whom 355 were aged 65+ 2 ONS data on average incomes, taxes and benefits for retired households, published on 24 May 2016: https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/inc omeandwealth/datasets/theeffectsoftaxesandbenefitsonhouseholdincomefinancialyearendi ng2014

SOURCE:  Prudential

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