New data out from the ONS today gives an insight into the changing financial realities of the UK’s retired households. Stretching over 30 years from 1977 to 2010/11, the data paint a picture of rising pensioner income alongside a shift from state to private sources. Private income, such as that from private pensions, employment and investments, has grown considerably more than state income, as shown below. State income, which includes pensions and other cash benefits (such as Pension Credit and Winter Fuel Allowance), doubled over the period while private income nearly quadrupled.
Source: Resolution Foundation analysis of ONS data
Notes: All income, tax and benefit measures have been deflated to 2010/11 prices using an implied deflator for the household sector
The growth in private income has predominately been driven by private pensions . This is both because more people have such pensions and because they have a higher average value. There has also been strong growth in other non-government income such as earnings from employment. Though earnings and investment income both fell around the time of the financial crash, the long term trend is clear.
Of course averages hide a multitude of sins, and private pension coverage and value is still insufficient particularly among poorer households. Of those in low to middle income working-age households for example, households; by 2010-11 this had fallen to 50 per cent. But there is significant variation across the distribution, with private income ranging from 20 per cent for the bottom fifth of the pensioner population to 74 per cent for the top fifth.
And this distinction has grown over time. This picture of private income comprising a growing proportion of total income as we move up the income distribution was absent 30 years ago: in 1977, private sources accounted for just 10 per cent of all income across each of the bottom three quintiles. At present, private sources increase incrementally along the income distribution. Clearly this long-term shift from state to private income sources in retirement has important implications for policy that will shape how government responds to its ageing population.
 Private pensions are predominantly occupational pensions, personal pensions and annuities.