"These figures show that for millions of people the pensions crisis is not a thing of the future, it is happening now."
This is up from 1 million, or 28%, in 2014/15 when the pension freedoms were introduced.
Government figures also reveal a rise in pensioner income inequality. From 2014/15 to 2016/17 income for the poorest one million pensioners fell by 0.73% while the richest one million pensioners were 10% better off. This makes the average income gap between these two groups £50,898 per year.
The richest pensioner households have more than six times the income of the poorest pensioner households, who still fall someway short of the £14,300 minimum income requirement identified by the Joseph Rowntree Foundation.
Most of the changes can be attributed to fluctuations in pension and investment income retirees received. In 2014/15 the poorest 10% received £1,639 from pensions or annuities and £400 from investments. That dropped to £1,449 and £259 in 2016/17. Those figures increased from £34,709 and £7,247 to £39,507 and £10,374 during the same period for the richest 10%.
Stephen Lowe, group communications director at Just Group, said: “These figures show that for millions of people the pensions crisis is not a thing of the future, it is happening now. While we often hear about how well the ‘Baby Boomers’ are doing, this focus on the wealthiest ignores another very serious problem. For those who have least, how they use their pension pot in retirement can make the biggest difference.
“The Financial Guidance Bill going through Parliament could help resolve this glaring omission from the Pension Freedoms policy – ‘what to do about those not getting advice or help?’. The Bill’s proposal to automatically enrol everyone into free impartial guidance will equip people to make better informed decisions and help to prevent people from being scammed, paralysed by choice or following the path of least resistance into uncompetitive and perhaps ill-suited products.
“People naturally disposed to taking professional advice may choose to opt out of free guidance but for the many millions of people who don’t currently receive help, automatic enrolment into guidance could be a game changer.”
