- From the late 1970s, just as Mrs. Thatcher was about to ride into Downing Street to the opening of the tenure of Mrs. May in 2016, the disposable income of those retired households grew at an annual average real-terms rate of 2.8%.
- The mean gross income of this segment (including benefits) had thus swollen by a factor of 3 across this generation of time.
- Whereas just less than 50% of retired households enjoyed the benefit of a private pension in 1997 this had risen to 80% by 2016.
- Average disposable income for those with one of those private pension plans is now (2017) ca £28,000 per annum. (This figure is not so different from the median gross weekly earning of full-time employees).
Now, if any well-meaning figure from public life in the late 1970s could have been transported in a time-machine to a point some 17 years into the following century in order to survey the prevailing financial condition of the over-65s, he/she might well conclude that, by luck or design (or more precisely by a helpful mix of public pension provision and deliciously compounding corporate pension schemes), things had worked out rather well. Without being insensitive to the precarious living conditions of still too many OAPs, one has to say that pensioner poverty is not the scourge it was.
We juxtapose further. By the Summer of 2017, the average price for a residential property in England was roughly £232k – having been ca £150k in 2005. According to the Land Registry / ONS, house prices in Britain have risen by a thumping 7% per annum since 1980. For London itself, in 2017 the average house was changing hands at nearly £500,000; more widely in the South East, the umber is well in excess of £300,000.
In the national 65-74 age group, some 80% are home-owners, many with a mortgage long since redeemed. While respecting important inter-regional differences here, one has to assert the obvious : many Third Agers are sitting on, indeed in, very substantial assets of a kind many currently in the family-formation stage-of-life are unlikely to achieve. For only one third of those in the age group 25-34 are home owners while the number of virgin buyers has fallen to ca 300,000 each year – roughly half of the number prevailing in 1985.
Alright already. Let’s get to the point for this brief blog.
- The Third Age community in the UK is more liquid than it has ever been but it is still not nearly pro-actively liquid enough for the national good.
- We say this because a) inflation is looking set stubbornly to exceed wage/salary increases here while b) no forecast for the immediate future puts UK GDP growth in excess of 2%. One has to say that it is unlikely that Brexit will render this picture any more roseate, any less fragile.
- The economy needs older people to spend more in the shops.
Plenty of features are, after all, draining the buying power of the younger Brit. For instance, the ONS Index of Private Housing Rental Prices makes for an interesting read in this respect, ie set at 100 for the Summer of 2011 it had touched 115 by the Summer of 2017. Meanwhile, by 2018 the value of outstanding student loans will reach a stunning £100 billion; the average debt shouldered by a graduate of the first £9k-per-annum fee generation is £32,000. (Over 1 million tuition fee loans are issued every year now). The inhibition to free spending in millions of young households is stark. (Source : HoC Briefing June 2017).
It would be good if some form of national your-country-needs-you campaign could encourage those older citizens who inhabit valuable homes (principally in the South East of England) to move to smaller dwellings and render themselves even more liquid thereby, even as they enjoy the extra years that the new longevity will bring them. This is a delicate matter as the controversy over care-home costs proved all too explosively in GE17. But the current situation as we outline it here is a form of macro-economic arthritis, left unrelieved by too much conservatism of attitude and uncertain/hesitant public policy and a commercial culture which will not yet put grey hairs fully in its cross-hairs. (See Rinkli Funstaz passim).
It is interesting in this respect to re-visit the debate about Third Age perks (eg the recent politics of the universality of the Winter Fuel Allowance). Now, take bus travel. The DoT tells us that there are now some 9 million concessionary bus passes for older people being used in England “with an average of 98 bus journeys per pass per year”. There are those who would (perhaps in the interest of inter-generational equity) argue that this is now too generous a benefit. But given the liquid it leaves in millions of grey wallets, would M&S agree? Boots? Costa Coffee? Greggs? Tesco?
Do we want more pension holders to become super-shoppers, confident in their spending while confident in their long-term personal finances? Yes we do. Difficult to achieve but much of the modern economy’s well-being pivots on this story.