Accredited official statistics

Pensioners’ Incomes: Background information and methodology

Published 27 March 2025

1. Introduction

This background report accompanies the main pensioners’ incomes report for financial year ending (FYE) 2024.

The purpose of this report is to provide further contextual information to aid understanding of the statistics presented in the main report and data tables. It outlines points to note as well as strengths and limitations of the information presented in each section of the main report, alternative data sources, as well as changes this year.

A detailed description of the pensioners’ incomes methodology, data processing and quality assurance are presented within the relevant sections in this report. These descriptions are intended to help users in the use and interpretation of the FYE 2024 data.

This document, the statistics release and data tables, along with previous releases, can be found on the collections page.

A. Status of the Statistics

Accredited Official Statistics

These accredited official statistics were independently reviewed by the Office for Statistics Regulation (OSR) in November 2012. The continued accreditation of these statistics as National Statistics was confirmed in September 2022 following a compliance check by the OSR. They comply with the standards of trustworthiness, quality and value in the Code of Practice for Statistics and should be labelled ‘accredited official statistics’. Accredited official statistics are called National Statistics in the Statistics and Registration Service Act 2007.

You are welcome to contact us at pensioners-incomes@dwp.gov.uk  directly with any comments about how we meet these standards. Alternatively, you can contact OSR by emailing regulation@statistics.gov.uk or via the OSR website.

Since this assessment by the OSR in 2012, we have continued to comply with the Code of Practice for Statistics, and have made several improvements including:

• adding value, in line with DWP Statistics reporting practices, publications have been made significantly shorter to enable a focus on commentary and houseanalysis that aids interpretation to increase clarity and insight
• the timeliness of the publication has been improved so that reports are released within 12 months of the completion of the Family Resources Survey (FRS), made possible by improvements to the suite of codes that are used to conduct analysis
• by making our data available on Stat-Xplore and the UK Data Service, our statistics are more accessible to users and support new analysis not included in the publication
• the quality of statistics has improved as variants of the CPI have replaced the use of Retail Prices Index (RPI) when adjusting for inflation, in line with guidance from the UK Statistics Authority and National Statistician
• introduced an improved methodology for measuring and reporting uncertainty around key Pensioners’ Incomes (PI) estimates
• amendments to our reporting of ethnic background to reflect fully that this is self-declared. Representation rates are now calculated from known declarations only and exclude ‘choose not to declare’ and ‘unknown’. Only a minimal number of interviews were affected by this change
• added new tables in response to user needs

Users have been informed in advance of changes to the PI publication. Please see the DWP Statistical Work Programme and the PI Release Strategy for more details. 

It is DWP’s responsibility to maintain compliance with the standards expected of Accredited Official Statistics. If DWP becomes concerned about whether these statistics are still meeting the appropriate standards, we will discuss any concerns with the OSR. Accredited Official Statistics status can be removed at any point when the highest standards are not maintained and reinstated when standards are restored.

Read further information about Accredited Official Statistics on the UK Statistics Authority website.

B. Background

Relevance

PI contains estimates of the levels, sources, and distribution of pensioners’ incomes. It also examines the position of single pensioners and pensioner couples, including any dependent children, within the income distribution of the population as a whole. This is different from the Households Below Average Income (HBAI) publication. This is because PI only includes the income of pensioner units and excludes the income of other adults living in the same household.

This is a key source of information that is used to inform government thinking on relevant policies, as well as related programmes and projects. Users include policy and analytical teams within the DWP and the Department of Communities in Northern Ireland. Researchers and analysts outside government use the statistics and data to examine topics such as ageing, distributional impacts of fiscal policies and the income profiles of pensioner groups. Estimates in PI (as well as in HBAI) are based on data from the FRS.

PI also contributes data to the Race Equality Unit who publish Ethnicity Facts and Figures about State Support. Ethnicity Facts and Figures provides information about the different experiences of people from a variety of ethnic backgrounds. It gathers data collected by government in one place, making it available to the public, specialists, and charities.

Read more about PI online.

Accessibility

We have further reviewed our publication tables and supporting guidance to ensure accessibility to users. For compliance with The Public Sector Bodies (Websites and Mobile Applications) Accessibility Regulations 2018, some formatting in the ODS tables, such as merged cells, has been avoided. For more information, please see the accessibility statement specific to DWP’s statistical releases.

The PI publication and background information and methodology are released in HTML format. PI data tables are released as ODS tables.

PI data is available from FYE 1995 to FYE 2024 on the Stat-Xplore online tool, which allows users to create their own PI analysis. The PI information is available at family (pensioner unit) level.

Versions of the PI dataset are publicly available through the UK Data Service.

Clarity

PI statistics contain contact details for further information on the statistics, guidance on using the statistics, data sources, limitations, and other necessary relevant information to enable users of the data to interpret and apply the statistics correctly.

Within the data tables, a guidance page offers further help in interpreting the estimates. To aid interpretation a Glossary of key terms can be found at the end of this document. For more detail on the coherence and comparability of the PI themes see Section 1H.

Timeliness and Punctuality

In terms of timeliness, data relating to any given financial year are released at the end of the following financial year (March).

PI is based on FRS and HBAI data. FRS and HBAI FYE 2024 were released at the same time as PI FYE 2024.

In terms of punctuality, data has been released as announced in the release calendar, in March each year since 2017.

Confidentiality, security, and transparency

Data is held securely with access given only to analysts who have completed internal data access and security training and have a business need to access the data.

C. Context of the statistics

Pensioners are an increasingly large and diverse group in the population. There are several recent reforms affecting current and future pensioners, including:

• equalisation of and increasing State Pension age (SPa)
• New State Pension
• pension freedoms
• private pension reforms including automatic enrolment

This publication illustrates changes in pensioners’ incomes over time and puts the results in the context of both economic and policy changes.

Pensioner demographics

The Office for National Statistics (ONS) population estimates for mid- 2023 found that people aged 65 and over represented nearly one in five people.

According to the ONS the UK’s age structure is shifting towards older ages because of declining fertility rates and people living longer. The number of people of pensionable age relative to the size of those of expected working age is increasing.

Home ownership continues to be higher for pensioners compared to those of working age. Around three-quarters of pensioners live in homes that are owned outright (compared to a quarter of working-age adults), therefore face minimal housing costs, as explained in the HBAI report.

Considerations when interpreting average pensioner incomes

PI finds that there are differences in average incomes between age groups as well as changes over time. There are several reasons for this which should be noted when interpreting these results:

• the ‘age’ effect: older pensioners are less likely to be in work and hence receive a smaller amount from earnings. Furthermore, they are less likely to have a partner who is in work. Any pension(s) they may be in receipt of are related to their earnings, years of scheme membership, and pension contributions (including National Insurance in the case of the State Pension) they made previously in their working lives
• the ‘cohort’ effect: the rapid rise in occupational pension coverage in the 1950s and 1960s will have been more beneficial to later cohorts. From the 1980s, coverage of high contribution defined benefit (DB) schemes started to decline with most private sector DB schemes now closed to new joiners. Only 4% of all schemes are open to new entrants. Coverage in private sector workplace pensions only started to increase from 2012 following the introduction of Automatic Enrolment (AE). However, contributions to defined contribution (DC) schemes are currently much lower than previous defined benefit schemes
• the length of time since retirement: pensions generally increase by less generous uprating measures after retirement. In addition, most annuities purchased with occupational or personal pensions are level annuities, which do not increase over time. Income in real terms is therefore decreasing for these annuities once inflation is considered
• uprating: in FYE 2024 the Basic and New State Pension increased by 10.1% in line with Consumer Price Index (CPI) inflation as of September 2022
• changing SPa over time: from 6 April 2010, the SPa has been increasing gradually for females, and since December 2018 has been increasing for both males and females. The FRS data contained in this report was collected throughout FYE 2024, during which the SPa for both males and females remained at 66 years. In this report, people are categorised as being above SPa based upon their reported birth date and the timetable for the legislated increases in SPa
• annuities and lump sums: 95% of all individuals receiving a private pension payment do so through a DB or DC Annuity. However, individuals who have just started accessing their private pension are much more likely to be receiving this through a Lump Sum or other DC product (49%)
• cost of living and wider support schemes: during FYE 2024 the government continued to provide additional support to families with several cost of living and wider support schemes, depending on peoples’ circumstances. These payments are included as part of the income variables on the FRS dataset and are therefore also present in the PI data. PI data tables using variables that include the calculation of pensioner unit income reflect the Cost of Living Payments that the pensioner unit received. For more information, please see the section on Cost of Living Payments or refer to the FRS Background information and methodology

D. Policy Changes

For further explanation of any of the following terms, please refer to the Glossary at the end of this document.

State Pension

In October 2020, the State Pension age increased to 66 years for both males and females and has remained at 66 years for FYE 2024. Further increases to bring the State Pension age to 67 years are proposed to be phased in between 2026 and 2028. See the State Pension age timetable for further planned changes.

Pensioner TV licences

From 1 August 2020, anyone who was aged 75 years or over and received Pension Credit was entitled to a free TV licence.

Uprating

In April 2023:

• inflation-linked benefits and tax credits rose by 10.1% in line with the Consumer Prices Index (CPI), as of September 2022
• the Basic State Pension and New State Pension increased by 10.1% in line with CPI inflation, following the restoration of the ‘triple lock’ which was suspended in FYE 2023. The ‘triple lock’ has ensured that the Basic and New State Pension increased by the highest of the increase in earnings, price inflation as measured by the CPI, or 2.5%. The Basic State Pension increased from £141.85 per week in FYE 2023 to £156.20 per week in FYE 2024, a cash increase of £14.35 per week. The New State Pension increased from £185.15 per week in FYE 2023 to £203.85 per week in FYE 2024, a cash increase £18.70 per week
• the Standard Minimum Guarantee (SMG) in Pension Credit increased by 10.1%. For those who were single, the Standard Minimum Guarantee in Pension Credit increased from £182.60 per week in FYE 2023 to £201.05 per week in FYE 2024, a cash increase of £18.45 per week. For couples, this increased from £278.70 per week in FYE 2023 to £306.85 per week in FYE 2024, a cash increase of £28.15
• both the lower and higher Universal Credit Work Allowances rose broadly in line with CPI inflation. The lower rate increased by 10.2% to £379 per month in FYE 2024, and the higher rate increased by 10.1% to £631 per month in FYE 2024

Council Tax and rates                     

• The Department for Levelling Up, Housing and Communities (renamed to the Ministry of Housing, Communities and Local Government in July 2024) estimated that the average Band D Council Tax set by local authorities in England for FYE 2024 had increased by 5.1% from FYE 2023 levels
• in Wales, the average Band D Council Tax for FYE 2024 represented an increase of 5.8% from FYE 2023 levels. In Scotland, the average Band D Council Tax for FYE 2024 represented an increase of 5% from FYE 2023 levels. In Northern Ireland, the rates (poundage) for FYE 2024 represented an increase of 6% from FYE 2023 levels

Housing Support for private renters

In April 2020, Local Housing Allowance rates were made more generous, as they increased to the 30th percentile of market rents. These rates remained the same for FYE 2024.

Cost of Living Payments

Eligible households on income-related benefits, including Universal Credit, Pension Credit and Tax Credits, received payments to help with the cost of living in FYE 2024, through three different schemes. These payments were generally made automatically between 25 April 2023 and 22 February 2024, although mop-up payments were paid to some claimants not covered by the automatic runs e.g. where they had made a claim but were not yet in payment of the eligibility date. More information on Cost of Living Payments can be found here. For more information on the treatment of Cost of Living Payments in the Family Resources Survey (FRS) FYE 2024, please see the FRS background information and methodology. Households may have received the following payments, depending on their circumstances on specific dates or during a particular period:

• a means-tested benefit Cost of Living Payment for households on a qualifying low-income benefit or tax credits. A payment of £900 was paid in 3 lump sums of £301, £300, and £299, in the spring, autumn and winter respectively, to households already in receipt of the eligible benefits. This payment was made on top of any benefit payments received by the claimants
• a Disability Cost of Living Payment for households on a qualifying disability benefit. A lump sum payment of £150 was paid automatically between 20 June 2023 and 4 July 2023, to those already in receipt of the eligible benefits. To be eligible for the payment, households must have received a payment (or later receive a payment) of one of these qualifying benefits before 1 April 2023
• a Pensioner Cost of Living Payment for households entitled to a Winter Fuel Payment for winter 2023 to  2024. An extra £150 or £300 was paid with eligible households’ normal payments of the Winter Fuel Payment from November 2023. This is in addition to any other Cost of Living Payment received

Household Support Fund

The Household Support Fund (HSF) has been running since the 6th October 2021, with the latest iteration, HSF4, running for a year from 1st April 2023 to 31st March 2024 with £1bn of funding, including funding from the Barnett formula to the devolved administrations. The aim of the HSF is to support vulnerable households across England most in need by helping them to meet their daily needs such as food, clothing, energy, and other essential living needs.

Warm Home Discount

Between October 2023 and March 2024, eligible households began to receive a one-off discount on their energy bill under the Warm Home Discount scheme. The rebate was set at £150. It was automatically discounted from energy bills for houses in England and Wales where households were eligible if they were either in receipt of the Guarantee Credit element of Pension Credit or were on a low income and have high energy costs.

Alternatively, in Scotland, households were eligible if they were either in receipt of the Guarantee Credit element of Pension Credit or were on a low income and met their energy suppliers’ criteria for the scheme. The discount was not automatic; an application to the energy supplier was required.

The scheme was not available in Northern Ireland.

E. Source of the statistics

The Family Resources Survey (FRS) is the main underlying data source for PI. It is one of the largest cross-sectional household surveys in the UK. The focus of the FRS is capturing information on household incomes, so it provides more detail on different income sources than other household surveys, making it the foremost source of income data. The FRS also captures contextual information on household and individual circumstances, such as employment, education level and disability. Overall, it is a comprehensive data source that allows for a range of different analysis.

The PI publication is also based on the Households Below Average Income (HBAI) dataset, which is derived from the FRS. HBAI makes an adjustment for households with very high incomes, as the FRS under-records information about these households. The HBAI quality and methodology information report provides further details on this and other topics.

The FRS is an annual survey based on financial years. Data is available for every year since FYE 1995.

Sample size: From April 2011, the target achieved UK sample size for the FRS was reduced by 5,000 households from 25,000 to 20,000 households a year. A published assessment concluded that this reduced sample still allowed the core outputs from the FRS, such as the individual measure of income in PI, to be produced. It should be noted that due to the coronavirus (COVID-19) pandemic, there was a smaller achieved sample size in FYE 2021 and FYE 2022. In FYE 2024, target sample size returned to 20,000 and the actual achieved sample size was nearly 17,000. This was lower than that achieved in FYE 2023 (just over 25,000) and more comparable to the years prior to the COVID-19 pandemic.

Coverage: Until FYE 2002, the FRS covered Great Britain. Since FYE 2003, Northern Ireland has been included, meaning the whole of the United Kingdom is included in PI. Therefore, caution should be taken when comparing results across these years.

F. Strengths of the statistics

• the FRS captures more detail on different income sources compared to other household surveys; this allows PI to analyse and report on the different income sources for pensioners
• the FRS provides information on components of income and housing costs which are unavailable in administrative data
• the relatively long time series available means that trends can be assessed going back to FYE 1995, allowing an analysis of the effects of policies and events on the incomes of pensioners over time
• the range of demographic breakdowns allows comparisons between the incomes of groups of pensioners based on age, gender, ethnicity, and marital status
• confidence intervals are calculated for a wide range of estimates using a bootstrapping approach (see ‘Measuring the size of sampling error’ below). These measures of uncertainty indicate whether differences between demographic groups and changes between years are likely to be real differences or caused by sampling error
• PI provides information on the income of pensioner units in monetary terms, split by sources of income
• PI also includes a range of metrics to support a wide range of different research questions, as found in the methodology section of this document

G. Limitations of the statistics

FRS data collection since FYE 2021

The composition of the FRS sample for FYE 2021 and FYE 2022 was affected by the move to telephone interviewing in response to the coronavirus (COVID-19) pandemic.

In FYE 2023, fieldwork operations for the FRS returned with face-to-face the preferred method of interviewing with telephone interviewing retained as an alternative. This fieldwork approach continued into FYE 2024.

For FYE 2024, the FRS achieved a sample of just under 17,000 households of this approximately 6,300 were pensioner units. This was lower than that achieved in FYE 2023, just over 25,000 households and approximately 9,300 pensioner units, but more comparable to the years prior to the COVID-19 pandemic.

This publication concentrates on long term changes in pensioners’ incomes, and interpretation of year-on-year changes should be treated with caution, as they are not usually statistically significant. Users should be mindful of the differences in data collection approaches across the period and the effect this has had on sample composition when interpreting changes in estimates over recent years. Additional caution is advised when interpreting changes in the data during and since the pandemic, and when comparing directly with pre-pandemic estimates.

More information can be found in the HBAI quality and methodology information report and the FRS background information and methodology .

This publication is based on survey data. Therefore, it is subject to potential limitations inherent in all surveys, including:

• sampling error: This will vary to a greater or lesser extent depending on the level of disaggregation at which results are presented
• non-response error: Systematic bias due to non-response by households selected for interview in the FRS. The response rate for the FRS in the FYE 2024 was 32%. To correct for differential non-response, estimates are weighted using population totals
• survey coverage: The FRS covers private households in the UK. Therefore, individuals in nursing or retirement homes, for example, will not be included. This means that figures relating to the most elderly individuals may not be representative of the UK population, as some individuals in this age group will have moved into homes where they can receive more frequent help
• survey design: The FRS uses a clustered sample design to produce robust regional estimates. Therefore, the FRS is not suitable for analysis below region level
• sample size: Although the FRS has a relatively large sample size for a household survey, small sample sizes may require several years of data to be combined for some analysis

Furthermore, relative to administrative records, the FRS is known to under-report benefit receipt. However, the FRS is the best source for looking at benefit and tax credit receipt by characteristics not captured on administrative sources, and for looking at total benefit receipt on a benefit unit or household basis. It is often inappropriate to look at benefit receipt on an individual basis because means-tested benefits are paid on behalf of the benefit unit. For further information on the under-reporting of benefit receipt, see the FRS background information and methodology and the new FRS quality assessment report.

H. Coherence and comparability

Coherence

PI uses a harmonised and consistent methodology. Any changes to the methodology are reported and announced here.

The PI release strategy highlights the potential release of new statistics within the publication and announces any other developments for future publications.

Comparability

PI uses uprating factors to adjust for inflation, by bringing values from previous years into current price terms for the most recent year of the publication. This means that the years are comparable over time.

I. Definitions and terminology

The Office for National Statistics (ONS) has published a guide for users of official statistics on earnings and income. This guide compares the main sources of data available and outlines which sources will best meet user needs. This can be found here: A guide to sources of data on income and earnings.

Other useful information on income and earnings:

• explaining income and earnings
• GSS income and earnings statistics interactive database (civilservice.gov.uk)
• income and earnings coherence workplan for 2024 to 2025 – Government Analysis Function (civilservice.gov.uk)
• admin-based income statistics, England, and Wales - Office for National Statistics (ons.gov.uk)

More information can be found in the Glossary, below.

Pensioner units

PI provides analysis on pensioner benefit units (known as pensioner units), which include:

Age of pensioner units

For analysis of pensioner units by age, pensioner couples are categorised by the age of the head. The head of the pensioner unit is the Household Reference Person (HRP, see below) if they belong to the pensioner unit. In households with multiple pensioner units, if the HRP is not part of the pensioner unit, the head of the pensioner unit is the first person from the pensioner unit named in the interview. In households where there is one person under SPa and one person over SPa, the younger person may be the HRP and therefore the head of a pensioner unit need not be over SPa.

The HRP is the householder with the highest income, regardless of gender.

• in a single adult household, the HRP is the sole householder (ie, the person in whose name the accommodation is owned or rented)
• if there are two or more householders, the HRP is the householder with the highest personal income from all sources
• if there are two or more householders who have the same income, the HRP is the eldest householder

Income

PI estimates do not reflect income from other adults and their dependent children in a household. For example, if a pensioner lives with their adult children, the younger adults’ incomes are not included in this analysis. While the benefit income of dependent children is included in the estimates, this was only relevant for just over half a per cent of pensioner units in FYE 2024.

Estimates are based on unequivalised income, except when comparing to the overall population distribution in section 7 of the main publication and in tables 4.6 and 4.7 of the table pack. Equivalisation makes an adjustment to income to reflect household size and composition to compare income across households as a measure of living standards and is used in the HBAI publication. In most cases in PI, income is shown for single pensioners and pensioner couples separately.

Income measures

Gross income: In PI, gross income is generally separated into six components:

1. Income from benefits, including tax credits. In some tables this is further divided into:

a. State Pension: Basic and Additional State Pensions, New State Pension, Bereavement Allowance (previously Widow’s Pension), and Widowed Parent’s Allowance

b. income-related benefits: Pension Credit, Housing Benefit, Council Tax Reduction, Social Fund Payments, and Universal Credit (for working-age partners of pensioners included within the PI dataset)

c. disability benefits: Disability Living Allowance, Personal Independence Payments, Armed Forces Compensation Scheme, Attendance Allowance, Industrial Injuries Disablement Benefit, Adult Disability Payment (Scotland only, from FYE 2023) and any remaining Severe Disablement Allowance cases

These three benefit types are not exhaustive: there are benefits, such as Winter Fuel Payments and Carers’ Allowance, which do not fit into any of these categories but are included in total benefit income.

2. Income from occupational pensions: employee pensions associated with an employer and workplace.

3. Income from personal pensions: personal pensions, annuities bought with lump sums from personal pensions, trade union and friendly society pensions.

Income from private pensions is the sum of income from occupational pensions and personal pensions.

4. Income from investments: including interest from Individual Savings Accounts (ISAs) and other savings accounts, unit trusts, bonds, stocks, and shares.

5. Income from earnings: including employee earnings and profit and loss from self-employment, as well as income from dividends. From FYE 2022, income received from director’s dividends is included in the estimates following an addition to the FRS. From FYE 2023 they are included where directors are classed as either employees, or self-employed and using business income as the basis of earnings (but not if self-employed and using profit and loss). This followed a methodological review.

6. Other income: benefits from friendly societies, income received for dependent children, maintenance payments and, from August 2020, free TV licences for those aged 75 and over who receive Pension Credit. In FYE 2023, this included several wider support Cost of Living Payments: the Council Tax Rebate, the Energy Bill Support Scheme, the Northern Ireland Energy Bills Support Scheme, the Warm Home Discount, and Welsh Fuel Support Payment. Of these, only the Warm Home Discount continued into FYE 2024.

More information about the different income sources can be found in the Glossary and for further information on the treatment of Cost of Living Payments and wider support schemes in FYE 2024, see the FRS background information and methodology.

Net income before housing costs (BHC) comprises total income from all sources for all members of the pensioner unit. Income is net of:

• income tax payments
• National Insurance contributions
• contributions to pension schemes
• local taxes (ie, Council Tax or domestic rates)
• maintenance and child support payments
• student loan repayments, and
• parental contributions to students living away from home

Net income after housing costs (AHC) is derived by deducting a measure of housing costs from the above income measure and is also net of:

• rent (gross of housing benefits)
• water rates, community water charges and council water charges
• structural insurance premiums (for owner occupiers)
• mortgage interest payments (net of any tax relief), and
• ground rent and service charges

Income from Housing Benefit is included within gross income as an income-related benefit. Capital mortgage repayments are not deducted as a Housing Cost, as this is regarded as an asset being accrued and not a cost.

We use AHC figures throughout the PI publication unless otherwise stated, as this is a better reflection of pensioners’ disposable incomes.

J. Alternative data sources

There are other data sources that can provide information on areas of interest like those in the PI publication. These are listed below:

• a guide to sources of data on income and earnings produced by the ONS. This guide is for users of official statistics on earnings and income. It compares the main sources of data available and outlines which sources will best meet user needs
• visit the income and earnings interactive tool where you can filter by government department and country of interest to find relevant statistics
• HBAI presents the number and percentage of pensioners living in low-income households and material deprivation
• the FRS publication includes pension participation for working-age individuals. This shows those who are saving for retirement and the type of pension they are saving in (occupational or personal)
• Income Dynamics looks at changes in household income including a measure of persistent low income, based on Understanding Society data
• the DWP Stat-Xplore Tool is a tool which provides users with access to administrative data, as well as data from FRS, HBAI and PI which allows users to conduct their own analysis. Users can download and analyse statistics on a range of different benefits, programmes, and other administrative information collected and stored by the department
• the English Longitudinal Study of Ageing (ELSA) is a biennial longitudinal study of the health, social and economic circumstances of a sample of approximately 7,600 people aged over 50 in England. ELSA started in the early 2000s, with ten waves of data currently published. It provides longitudinal data on pensions, savings, and labour market participation, as well as information on employment, retirement interactions, and transitions over the life courses of respondents as they grow older. ELSA also provides information on health trajectories, disability, and healthy life expectancy
• the Wealth and Assets Survey (WAS) is a large-scale longitudinal survey with eight rounds currently published. Round 8 (2020 to 2022) had a sample of around 15,100 households in GB. It is conducted by the ONS. The WAS dataset holds information about the economic status of households and individuals including their physical and financial assets, debts, and pension provision. WAS data is also used to understand how wealth is distributed and the factors which may affect financial planning, as well as respondents’ attitudes and behaviours towards saving. The Pension Wealth tables in WAS provide estimates of the types of private (non-state) pension wealth, split by a wide range of socio-demographic and economic breakdowns
• the Occupational Pension Scheme Survey (OPSS) was an annual survey, conducted by ONS. It covered occupational pension schemes from the public and private sector and samples at the level of the scheme. The OPSS provided the UK’s longest consistent time series for estimates of pension scheme membership, with data from 1953 to 2018, and it provided estimates of the number of schemes, scheme members, and their level of contributions
• the Financial Survey of Pension Schemes (FSPS) is a quarterly survey that gathers information about income and expenditure, transactions, assets, and liabilities of pension schemes
• the Annual Survey of Hours and Earnings (ASHE) is published by the ONS. It has been in place since 1997 and can be used to provide information on earnings for individuals close to or over SPa. It also collects significant information on employee pension membership and contributions. A summary dataset of pensioner results is published
• the Labour Force Survey (LFS) is a continuous, large scale sample survey conducted by the ONS which provides information on the labour market, including employment, unemployment, and economic activity rates. This source can be used to provide information on individuals close to or over SPa in the labour market
• the Benefit expenditure and caseload tables produced by DWP contain historic and forecast benefit expenditure and caseload data. These tables include long-term projections of pensioner benefit expenditure, as well as State Pension expenditure by country of residence
• DWP benefit statistics provide a high-level summary of Accredited Official and Official statistics available through Stat-Xplore on a range of benefits, including the State Pension and Pension Credit. The main statistical release document is published on a six-monthly basis, with some data also released quarterly via Stat-Xplore and data tables
• the personal incomes statistics as published by HM Revenue and Customs (HMRC) shows summary information about individuals who are UK taxpayers, their income, and the income tax to which they are liable. The data comes from the annual Survey of Personal Incomes, which samples administrative data held by HMRC on people who could be liable to UK income tax for the income tax year. This source includes information on income and tax for taxpayers of pension age
• explaining income and earnings provides information on income and earnings statistics published by government departments, including DWP. It contains information on gender, occupations, and the number of people earning below the National Living Wage
• changing trends and recent shortages in the labour market looks at workers that have entered or left the workforce and how this has changed in recent years
• early insights from the Over 50s Lifestyle Study, Great Britain looks at attitudes and reasons behind those aged 50 to 70 years leaving the labour market at some point in 2021, in Great Britain between 8 to 13 February 2022
• income estimates for small areas, England, and Wales are estimates of four measures of household income at local levels across England and Wales, based on the FRS
• Below Average Resources are official statistics in development, and a response to the public consultation on developing new statistics based on the Social Metrics Commission approach to poverty measurement
• Cost of Living Payment 2022 to 2023 management information is an ad hoc release of management information on the number of Cost of Living Payments processed by the government
• Cost of Living Payments evaluation provides findings from an evaluation of the Cost of Living Payments support scheme, based on research carried out in January 2024 and August 2024
• who has been affected by changing housing cost across England and Wales is a release published by the ONS which investigates how households in different areas of England and Wales have been affected by mortgage payment increases and rent cost increases

K. Revisions to the statistics

Correction to Cost of Living Support Schemes FYE 2023

When producing the FYE 2023 PI publication, one element of the Low income benefits and tax credits Cost of Living Payment was not included, those paid to Pension Credit recipients, which has impacted on the data tables.

This means that the specific income component for pensioners was not included in the FRS and HBAI analysis which feeds into the PI publication.

This error has been corrected in this release, with an impact of £1 per week increase in gross income for pensioners. Therefore, previous data tables should not be used. Stat-Xplore has also been corrected.

The department’s policy statement describes how DWP will handle revisions.

L. Quality Management

Quality Assurance (QA) during development

PI is based on the HBAI and FRS datasets. These datasets undergo substantial checking and verification both internally within DWP, and externally by the Institute for Fiscal Studies (IFS). When producing charts and tables for the publication, all content is independently quality assured by different members of the PI team to ensure methodology is robust. All commentary in the PI report is reviewed by the PI team and analysts from the relevant policy areas within DWP to ensure the information presented is accurate and meets user needs. The data QA process can be seen in the flowchart below:

• there is quality assurance across the end-to-end process of the FRS. Questionnaire design, testing the questionnaire, and fieldwork processes such as interviewer briefing are all robust
• the FRS requires a high threshold to accept interviews as being complete, before being included in the data process
• there are several feedback loops between the FRS, HBAI, IFS, and PI, as shown via the arrows in the flowchart above
• IFS provides additional quality assurance on the HBAI dataset
• PI also receives input through working with DWP policy analysts who are subject matter experts

Routine Quality Assurance

• every SAS program has its log checked to ensure no errors or warning messages are flagged when ran
• where updates to SAS code are required before running, this is highlighted within the program with examples of how this should have been updated
• checks that code has been updated correctly are part of the quality assurance of each section of the overall process

Independent assessors

Quality Assurance (QA) is conducted by:

• members of the Surveys Branch team
• a specifically defined QA group, consisting of people within the PI team, and analysts from within DWP

Suitable data sources

• the FRS is a well-designed survey whose data is designated as Accredited Official Statistics by the OSR
• FRS conducts stages of validation, editing, conversion, imputation, and grossing prior to publication
• HBAI, which also uses the FRS dataset, is the UK’s primary source of poverty estimates and is also the main source of household incomes
• the PI dataset draws on both the FRS and HBAI datasets to focus on pensioners

For more information on the quality assurance of the FRS dataset, see the FRS quality assessment report

M. Feedback

We welcome feedback.

If you have any comments or questions, please email pensioners-incomes@dwp.gov.uk.

N. Acknowledgements

Lead Statistician: Kate Martin

Publication Lead: Rachael Varley

Publication Team: William Shepherd, Matilda Cobbold and John Bilverstone

2. Statistical Presentation

Overview of the dissemination process

Pensioners’ Incomes (PI) includes a main publication, data tables available in ODS format, release strategy and this background information and methodology. PI data is also made available on Stat-Xplore. Versions of the dataset are available from the UK Data Service.

Points to Note about Statistical Concepts and Definitions

Use…	If…
Gross	Interested in how much income pensioners receive before any taxes are applied; Or interested in different sources of income.
Net	Interested in income available for pensioners to spend (excluding the income of other household members), either BHC or AHC.
Mean	Interested in all income available to pensioner units in a particular group; Do not consider the influence of the highest incomes to be a major problem; Or interested in breaking down income by source.
Median	Interested in the income of the ‘typical’ pensioner unit; Do not want the average distorted by a small number of high incomes; Or are looking at distributions of incomes.
Average (mean or median) for all	Interested in all income available to pensioner units; Or want to include those with no income from a particular source.
Average (mean or median) for those in receipt	Interested in the average ‘rate’ at which people receive income from a particular source; Or are interested in an individual source of income.
All pensioner units	Interested in broad trends in cash amounts for pensioners (both in couples and singles) as a whole.
Singles and couples separately	Comparing subgroups that contain different proportions of singles and couples; Or looking at distributions of income.
After housing costs	Interested in the income available for pensioners to spend after their housing costs have been met; Considering changes in this net income over time; Or for comparing pensioners’ incomes with working-age incomes.
Before housing costs	Interested in total net income.

3. Methodology

A. Rounding and accuracy

In the tables and publication, the following conventions have been used:

[low]	Negligible (less than 50,000 or 0.5 per cent or 50p)
[x]	Not available due to small sample size (fewer than 50 for averages, fewer than 100 for percentages) or as a result of less than three years of comparable data in three-year average tables.

Figures have been rounded to the nearest pound or one per cent. Population sizes have been rounded to the nearest 0.1 million. Individual figures have been rounded independently, so the sum of component items does not necessarily equal the totals shown.

B. Measuring living standards

Incomes are often used as a measure of the ‘standard of living’ achieved by different groups. However, there are many other factors that can affect living standards, such as wealth, physical health, and expenditure. These factors are not considered in this report. Furthermore, estimates of incomes in PI only consider the income of the pensioner units.

Pensioners’ standards of living may also be affected by the income of other adult members of the household or their dependents. Also, no adjustment (equivalisation) is made for single pensioners compared to couples. Income estimates should therefore only be regarded as broadly indicative of pensioners’ overall living standards.

Material deprivation for pensioners, an additional indicator for measuring living standards, has been included in the HBAI publication since FYE 2010 and is derived from a suite of questions in the FRS. A final score is calculated from the set of questions and compared with a threshold score to determine whether a pensioner is in material deprivation.

Material deprivation estimates for FYE 2024 are based on updated measures and therefore not directly comparable to previous estimates. We advise users not to make a direct comparison of changes in material deprivation estimates between FYE 2023 and FYE 2024.

This update to material deprivation measures follows the inclusion of new questions in the FRS from April 2023 to March 2024 and analysis by the Department to review the previous measures.

For details of the material deprivation indicator, see: Department for Work and Pensions Working Paper Number 54. For the latest results on the percentage of pensioners in low-income households and material deprivation, see the HBAI publication for FYE 2024.

A technical report which accompanies the release of the HBAI 2023/24 statistics has been published alongside the HBAI publication for FYE 2024 and sets out the analysis and decisions underpinning the updated material deprivation measures for FYE 2024.

Detailed information on the production of the FRS dataset can be found in this year’s FRS background information and methodology and the new FRS quality assessment report as well as more information on the changes to the material deprivation FRS questions. This also includes information on the survey design, sampling, collection, and quality assurance processes.

C. Grossing

Grossing-up is the term usually given to the process of applying factors to sample data so that they yield estimates of the overall population. Estimates in the PI publication incorporate the 2011 Census based mid-year population estimates into the grossing regime from FYE 2013 onwards. A consistent back series has been produced from FYE 2003 to FYE 2012.

In addition to the use of 2011 Census data, several minor methodological changes have also been implemented in the FRS dataset. These methodological changes were made on the recommendation of the ONS Methodological Advisory Service during an Initial Review of the FRS weighting scheme. A report of the changes made to the grossing regime is available.

The full set of inputs based on the 2021 Census (2022 for Scotland), which are required for the grossing factors, were not available in time to apply to this release. For this reason, estimates for the FYE 2024 survey year have their basis in the 2011 Census, as rolled forward to FYE 2024 by ONS’ mid-year estimates. All FRS based outputs use these population estimates for FYE 2024. Full details of our plans to use 2021 Census outputs for the production of FRS grossing factors can be found in the FRS Release Strategy.

The mid-year estimates cover the usual resident population and were adjusted to reflect the population living in private households and covered by the FRS sample. This was achieved by deflating the usually resident population using data from the 2011 Census on the proportion of the usually resident (by local authority, age and sex) population, who live in private households.

A software package called CALMAR, provided by the French National Statistics Institute, is used to reconcile control variables at different levels and estimate their joint population. This software makes the final weighted sample distributions match the population distributions through a process known as calibration weighting. It should be noted that if a few cases are associated with very small or very large grossing factors, grossed estimates will have relatively wide confidence intervals.

D. Adjusting for inflation

PI uses uprating factors to adjust for inflation, by bringing values from previous years into current price terms for the most recent year of the publication. As advised in a Statistical Notice published in May 2016, from FYE 2015 PI made a methodological change to use variants of the Consumer Prices Index (CPI) when adjusting for inflation. Prior to the FYE 2015 PI publication, variants of the Retail Prices Index (RPI) were used to adjust for inflation. Read more information in the FYE 2015 PI publication’s background information and methodology.

E. Adjustment for individuals with very high incomes

An adjustment is made to sample cases at the top of the income distribution to correct for volatility in the highest incomes captured in the survey. This adjustment uses data from HM Revenue and Customs Survey of Personal Incomes (SPI) to control the numbers and income levels of the ‘very rich’ while retaining the FRS data on the characteristics of the households. For FYE 2024, pensioners in Great Britain are subject to the SPI adjustment if their gross income exceeded £107,800 per year (£89,700 in Northern Ireland). Working-age adults (including the working-age partners of pensioners) are subject to the SPI adjustment if their gross income exceeded £361,200 per year (£189,400 per year in Northern Ireland).For more details on the SPI adjustment see the HBAI quality and methodology information report.

F. Negative incomes

Negative incomes are not thought to be indicative of standards of living. Pensioner units with negative net income BHC have the gross income components of income, and their net income BHC, set to zero. Net income AHC is set to zero minus housing costs, and so for a small number of cases will be negative. See the PI methodological paper number two for more information on negative incomes.

G. Output standards for ethnic groups

The PI FYE 2024 publication continues to use the latest harmonised output standards for ethnic groups for the UK, however, ‘mixed’ and ‘other’ ethnic groups have been merged due to small sample sizes. The latest harmonised standards were published in August 2011 and cover the ethnic group question in England, Wales, Scotland, and Northern Ireland. They also cover harmonised data presentation for ethnic group outputs. The standards were updated in February 2013 detailing how Gypsy, Traveller, and Irish Traveller should be recorded in the outputs, due to differences across the UK.

Reporting of ethnic background was amended in FYE 2021 to reflect fully that this ethnicity is self-declared. Representation rates are now calculated from known declarations only and exclude ‘choose not to declare’ and ‘unknown.’ For the FRS and PI this has had a minimal effect on reporting.

For further details please see the Ethnicity harmonised standard.

H. Further information

A collection of methodological papers on PI are available which include papers on negative incomes, personal pension income, and definitions of pensioner units.

4. Reliability of estimates

The figures in this publication come from the FRS. Like all surveys, it gathers information from a sample rather than from the whole population. The size of the sample and the way in which the sample is selected is carefully designed to ensure that it is representative of the UK as whole, whilst bearing in mind practical considerations like time and cost constraints. Survey results are always estimates, not precise figures. This means that they are subject to a level of uncertainty which can affect how changes, especially over the short term, should be interpreted.

A. Estimating and reporting uncertainty

Two different random samples from one population, for example the UK, are unlikely to give the same survey results, which are likely to differ again from the results that would be obtained if the whole population was surveyed. This level of uncertainty around a survey estimate can be calculated and is commonly referred to as sampling error.

In addition to sampling error, the PI estimates can also be affected by other non-sampling errors. Some of these are:

• reporting errors: Imperfect recall and respondents choosing to deliberately give incorrect answers are examples of reporting error. If these errors are systematic, they may lead to bias in the survey estimates
• under-reporting: The FRS information on benefits relies on the respondent being able to accurately report the amount of benefit they receive. This reliance leads to under-reporting in receipt for many benefits. It is also thought that household surveys underestimate income from both self-employment and investments so these figures should be treated with caution. The under-reporting of income from investments is particularly likely to affect the estimates for pensioners
• misreporting: The type of income received is self-reported by survey respondents and can consequently be misreported. For example, some survey respondents may not be able to distinguish between the State Pension and Pension Credit because these benefits can be paid jointly
• systematic bias: This arises in the sample if certain groups are less likely to respond to a survey than others. This is corrected to some extent in the FRS by grossing to match subgroups of the population by age, sex, family status, tenure, Council Tax band, and broad geographic region. Nevertheless, it is difficult to account for all possible bias, so some results may still be affected

We can calculate the level of uncertainty around a survey estimate by exploring how that estimate would change if we were to draw many survey samples for the same time period, instead of just one. This process is called bootstrapping.

B. Measuring the size of sampling error

Bootstrapping allows us to define a range around the estimate (known as a “confidence interval”) and to state how likely it is that the real value that the survey is trying to measure lies within that range. Confidence intervals are used as a guide to the size of sampling error. These are typically set up so that we can be 95% sure that the true value lies within the range, in which case this range is referred to as a “95% confidence interval”. A wider confidence interval indicates a greater uncertainty around the estimate. Generally, a smaller sample size will lead to estimates that have a wider confidence interval. This is because a smaller sample is less likely than a larger sample to reflect the characteristics of the total population and therefore there will be more uncertainty around the estimate derived from the sample.

Statistical significance: Some changes in estimates between years will be the result of different samples being chosen, whilst other changes will reflect underlying changes in income across the population. Confidence intervals can be used to identify changes in the data that are statistically significant; that is, they are unlikely to have occurred by chance due to a particular sample being chosen. Confidence intervals can give a range around the difference in a result from one year to the next. If the range does not include zero it indicates this change is unlikely to be the result of chance.

Working with uncertain estimates: Some changes between years will be small in relation to sampling variation and other sources of error and may not be statistically significant. This is relevant for particular sub-groups, as these will have smaller sample sizes than the overall survey sample size. For these sub-groups it is important to look at long-term trends.

5. Estimating and interpreting uncertainty in PI

A. Calculating uncertainty in PI

Since the FYE 2014 publication, confidence intervals have been calculated using a bootstrapping approach, using the statistical package SAS. This has allowed confidence intervals to be calculated for a wider range of estimates.

Bootstrapping considers the design of the sample. It replicates the sampling design of the survey and takes re-samples with replacement from the dataset, creating 500 new samples of the dataset. Each new sample is different and contains multiple copies of some survey observations and none of some others. Exploring the range of results in these samples allows us to generate confidence intervals around the result obtained in the original sample.

From the FYE 2016 publication and onwards, new bootstrapping methodology has provided an improved measure of uncertainty around key PI estimates by creating resamples of the HBAI dataset by simulating stratified, cluster sampling for GB and stratified sampling for NI. It also creates a unique set of grossing factors for each resample using the HBAI grossing process to gross the GB and NI resamples to the UK population. For a more technical guide to the approach used to generate confidence intervals in this report, please see the statistical notice or the HBAI quality and methodology information report.

B. Interpreting estimates of uncertainty in PI

Table M1.1 provides confidence intervals for key estimates of pensioners’ incomes in FYE 2024. For example, in FYE 2024, weekly gross income for all pensioner units is estimated to be £688. We can be 95% confident that the true value of gross income per week, if we were to take a census of the population, would lie between £669 and £709.

The table shows that, while there is a degree of uncertainty about the estimates, it does not affect the broad conclusions drawn, such as the relative importance of different types of income, or the fact that single males on average had higher incomes than single females.

When comparing two or more estimates, we must factor in the uncertainty surrounding each of the estimates. Table M1.2 shows the growth in sources of income between FYE 2014 and FYE 2024, and FYE 2023 and FYE 2024.

Statistically significant results (at the 95% confidence level) are marked with an asterisk (*). As can be seen, the confidence intervals around the estimates of various growth rates between FYE 2023 and FYE 2024 often include zero. This means that we cannot be confident that the growth rate is different from zero, and hence the change is not statistically significant.

Over short time periods, it is unlikely that an income measure will change dramatically, so the uncertainty is likely to be large compared with the change itself.

Users are advised to draw conclusions from long term trends rather than year on year changes.

Even some longer-term changes need to be interpreted with care. For income sources where the amount received per week varies greatly between pensioner units, such as investment income, even long-term comparisons may not be statistically significant. For example, income from investments has increased by 13% for single pensioners from FYE 2014 to FYE 2024, but this increase is not statistically significant (see Table M1.2).

For more information about uncertainty around FRS derived estimates see the 2014 uncertainty in FRS based analysis report. There is also the 2017 statistical notice for the change implemented from FYE 2016 data onwards.

Table M1.1: Uncertainty surrounding estimates in PI FYE 2024 (95% confidence)

Pensioner units	Estimate £pw	Interval width	Relative width	Interval range
Gross income	688	40	6%	669 to 709
Benefit income	302	13	4%	295 to 308
Occupational pension income	204	29	14%	190 to 219
Personal pension income	24	11	46%	17 to 28
Investment income	64	10	16%	59 to 69
Earnings income	91	25	27%	78 to 103
Other income	3	2	60%	2 to 4
Net income BHC	–	–	–	–
Mean	569	31	5%	554 to 585
Median	449	30	7%	434 to 464
Net income AHC	–	–	–	–
Mean	529	32	6%	513 to 546
Median	407	29	7%	394 to 423
Pensioner couples	–	–	–	–
Median net income BHC	622	43	7%	598 to 640
Median net income AHC	595	51	9%	569 to 620
Single pensioners	–	–	–	–
Median net income BHC	327	25	8%	314 to 339
Median net income AHC	282	27	10%	267 to 294
Single male pensioners	–	–	–	–
Median net income BHC	344	49	14%	317 to 365
Median net income AHC	292	54	18%	263 to 317
Single female pensioners	–	–	–	–
Median net income BHC	321	28	9%	308 to 336
Median net income AHC	278	32	11%	260 to 292
Pensioner units where the head is under 75	–	–	–	–
Median net income BHC	499	43	9%	479 to 522
Median net income AHC	455	52	11%	433 to 486
Pensioner units where the head is 75 or over	–	–	–	–
Median net income BHC	410	33	8%	395 to 428
Median net income AHC	372	38	10%	353 to 391

1.The interval widths are calculated on unrounded numbers and therefore may not match the interval range.

Table M1.2: Growth in average incomes of pensioner units, FYE 2014 to FYE 2024, and FYE 2023 to FYE 2024

Pensioner units	FYE 2014	FYE 2023	FYE 2024	FYE 2014 to FYE 2024	FYE 2023 to FYE 2024	interval FYE 2014 to FYE 2024	interval FYE 2023 to FYE 2024
Gross income	656	686	688	5%*	0%	1% to 10%	-4% to 5%
Benefit income	281	297	302	7%*	2%	4% to 11%	-1% to 4%
Occupational pension income	186	207	204	10%*	-1%	0% to 20%	-10% to 8%
Personal pension income	26	23	24	-10%	3%	-44% to 11%	-32% to 27%
Investment income	54	51	64	19%*	25%*	5% to 34%	8% to 39%
Earnings income	105	95	91	-13%	-4%	-29% to 2%	-30% to 16%
Other income	4	13	3	-15%	-74%*	-51% to 9%	-84% to -68%
Net income BHC	–	–	–	–	–	–	–
Mean	549	573	569	4%*	-1%	0% to 8%	-5% to 3%
Median	427	454	449	5%*	-1%	1% to 10%	-6% to 4%
Net income AHC	–	–	–	–	–	–	–
Mean	503	530	529	5%*	0%	1% to 10%	-5% to 4%
Median	380	410	407	7%*	-1%	3% to 13%	-5% to 4%
Pensioner couples	–	–	–	–	–	–	–
Gross income	901	935	943	5%	1%	-2% to 12%	-6% to 8%
Benefit income	318	344	352	11%*	2%	6% to 15%	-1% to 6%
Occupational pension income	267	300	297	11%	-1%	-3% to 24%	-10% to 10%
Personal pension income	42	34	35	-18%	2%	-56% to 5%	-49% to 31%
Investment income	81	77	98	20%	28%	-7% to 48%	-4% to 56%
Earnings income	187	166	156	-16%	-6%	-35% to 0%	-36% to 18%
Other income	4	13	5	5%	-65%*	-53% to 47%	-85% to -53%
Net income BHC	–	–	–	–	–	–	–
Mean	742	769	769	4%	0%	-2% to 9%	-5% to 5%
Median	600	628	622	4%	-1%	-2% to 9%	-6% to 5%
Net income AHC	–	–	–	–	–	–	–
Mean	702	731	734	5%	0%	-1% to 11%	-5% to 6%
Median	567	593	595	5%	0%	-2% to 11%	-5% to 7%
Single pensioners	–	–	–	–	–	–	–
Gross income	434	448	452	4%	1%	-7% to 12%	-10% to 9%
Benefit income	247	252	255	3%	1%	0% to 8%	-3% to 5%
Occupational pension	112	117	118	5%	0%	-15% to 20%	-16% to 14%
Personal pension	12	12	13	13%	8%	-66% to 57%	-48% to 46%
Investment income	29	27	33	13%	20%	-75% to 60%	-63% to 71%
Earnings	31	27	31	0%	14%	-59% to 36%	-47% to 55%
Other income	4	12	2	-38%*	-82%*	-89% to -10%	-92% to -74%
Net income BHC	–	–	–	–	–	–	–
Mean	374	386	384	3%	-1%	-6% to 8%	-8% to 6%
Median	323	337	327	1%	-3%	-3% to 6%	-8% to 1%
Net income AHC	–	–	–	–	–	–	–
Mean	323	338	339	5%	1%	-5% to 12%	-8% to 7%
Median	265	284	282	6%	-1%	0% to 12%	-8% to 5%

1. Results that are statistically significant are denoted with an asterisk (*).

2. Confidence intervals are calculated on unrounded numbers. Changes are indicated as statistically significant if the confidence interval before rounding does not include zero.

3. The percentage changes are calculated on unrounded numbers and therefore may not match those calculated for the rounded numbers shown in the table.

6. Households Below Average Income (HBAI) and Pensioners’ Incomes (PI)

Two of the tables in the PI table pack (Tables 4.6 and 4.7) provide information on the position of pensioners within the overall income distribution. These tables define pensioners as adults in families where at least one member is over SPa, consistent with the rest of the PI table pack. This is different to the definition used in HBAI which defines pensioners as those over SPa.

Results from HBAI should not be directly compared to those from PI. The main differences between HBAI and PI methods of analysis are:

Income components: The PI results include analysis of the components of pensioner unit income (benefit income, occupational pension income, etc.). HBAI, with its broader span of interests, does not present detailed analysis of this sort.

Household or pensioner unit: PI is generally concerned with cash incomes directly received by pensioners. It measures the income of pensioner units only (plus income for any dependent children within the pensioner unit), ignoring income received by any other members of the household. HBAI attempts to measure material living standards, so it includes all the income for the household in which the pensioner lives; the underlying HBAI assumption being that the total household income is shared amongst all household members.

Equivalisation: To allow comparison of living standards of different households, the HBAI ‘equivalises’ household income; that is, adjusts it to take account of household size and composition. One of the main functions of PI is to provide information on the income of pensioner units in monetary terms, split by sources of income. This can only be done using unequivalised income. Equivalisation is not necessary for most results, which are presented separately for pensioner couples and single pensioners. To avoid unnecessary complexity, the main PI results are presented in monetary terms, at constant FYE 2024 prices, rather than equivalised income at FYE 2024 prices. PI does however use equivalised income to analyse pensioners’ position in the overall population income distribution.

Equivalisation Scales: HBAI historically used the McClements equivalisation scale. Following user consultation, the FYE 2006 edition of HBAI and subsequent HBAI publications have used Modified OECD equivalisation scales. The same change has been made to the relevant data in PI since the FYE 2006 edition of PI. Information on the effect of the change can be found in Appendix B of the FYE 2006 edition of PI.

7. Glossary

This glossary gives a brief explanation for each of the key terms used in PI. Further details on these definitions, including full derivations of variables, are available on request from the DWP PI Team at pensioners-incomes@dwp.gov.uk.

A glossary of income and earnings terms produced by the ONS is also available.

Adult

All individuals who are aged 16 and over are classified as an adult, unless the individual is defined as a dependent child (see Child). All adults in the household are interviewed as part of the FRS.

Age

Respondent’s age at last birthday (at the time of the interview).

Automatic enrolment

Automatic enrolment requires all employers to enrol their eligible workers into a workplace pension scheme if they are not already in one. The staged timetable began in October 2012 for larger firms and completed for all employers in 2019. To preserve individual responsibility for the decision to save, workers can opt out of the scheme. To be eligible for automatic enrolment, the jobholder must be at least 22 years old, under SPa, earn above the earnings trigger for automatic enrolment, and work or usually work in the UK. For further information, see automatic enrolment.

Benefit unit or family

A benefit unit may consist of a single adult, or a married or cohabiting couple, plus any dependent children. Same-sex partners have been included in the same benefit unit since January 2006. Where a total for a benefit unit is presented (such as total benefit unit income) this includes income from adults plus any income from dependent children. There are various types of benefit unit:

• pensioner couple: Benefit units where either adult in the couple is over SPa
• pensioner couple, married or in a civil partnership: Benefit units headed by a couple in which at least one partner is over SPa and the couple are either married or in a civil partnership
• pensioner couple, cohabiting: Benefit units headed by a couple in which at least one partner is over SPa and the couple are neither married nor in a civil partnership
• single male pensioner: Benefit units headed by a single male adult over SPa
• single female pensioner: Benefit units headed by a single female adult over SPa

It should be noted that ‘pensioner unit’ is used throughout the report as a description of groups of individuals regardless of whether they are in receipt of any state support.

Benefits

Financial support from the government. Most of these benefits are administered by DWP. The major exceptions are Housing Benefit and Council Tax Reduction, which are administered by local authorities. Child Benefit is administered by HMRC, who also administer Tax Credits. These are not treated as benefits, but both Tax Credits and benefits are included in the term State Support. Tax Credits will ultimately be replaced by Universal Credit.

Benefits are often divided into income-related benefits and non-income-related benefits. In assessing entitlement to the former, the claimant’s income and savings will be checked against the rules of the benefit. In contrast, eligibility for non-income-related benefits is instead dependent on the claimant’s circumstances (a recent bereavement, for example), rather than their income and savings. A list of the main state benefits divided into these two categories is below.

Disability-related benefits is the term used to describe all benefits paid on grounds of disability. These are: Disability Living Allowance, Personal Independence Payments, Armed Forces Compensation Scheme, Attendance Allowance, Industrial Injuries Disablement Benefit, and any remaining Severe Disablement Allowance cases. Before FYE 2009, Incapacity Benefit was also in this group. Numbers on Incapacity Benefit and Severe Disablement Allowance benefits have decreased over time, as both were replaced by Employment and Support Allowance from October 2008.

Income-related benefits (UK)	Non-income-related benefits (UK)
Council Tax Reduction	Attendance Allowance
Employment and Support Allowance (income-related element)	Carer’s Allowance
Housing Benefit	Child Benefit
Income Support	Disability Living Allowance (both mobility and care components)
Pension Credit	Employment and Support Allowance (contributory element)
Universal Credit	Personal Independence Payment (Daily Living and Mobility components)
	State Pension

Child

A dependent child is defined as an individual aged under 16. A person is also defined as a child if they are 16 to 19 years old and they are all of the below:

• not married nor in a civil partnership nor living with a partner
• living with parents or a responsible adult
• in full-time non-advanced education or in unwaged government training.

Confidence interval

A measure of sampling error. A confidence interval is a range around an estimate which states how likely it is that the real value that the survey is trying to measure lies within that range. A wider confidence interval indicates a greater uncertainty around the estimate. Generally, a smaller sample size will lead to estimates that have a wider confidence interval than estimates from larger sample sizes. This is because a smaller sample is less likely than a larger sample to reflect the characteristics of the total population and therefore there will be more uncertainty around the estimate derived from the sample. Note that a confidence interval ignores any systematic errors which may be present in the survey and analysis processes.

Council Tax

The tax is based on which, of a set of bands, a property’s value falls into. Its headline rate is based on two adults per household. Read more information on Council Tax.

Equivalisation

Income measures used in HBAI consider variations in the size and composition of the households in which people live. This process is called equivalisation. Equivalisation reflects the fact that a family of several people needs a higher income than a single individual for them to enjoy a comparable standard of living. Equivalence scales conventionally take a couple with no children as the reference point. The process then relatively increases the income of single person households (since their incomes are divided by a value less than one) and relatively reduces the incomes of households with three or more persons, which have an equivalence value of greater than one.

We do not use equivalisation in PI, except in section 7 of the main publication and when comparing to the overall distribution in Tables 4.6 and 4.7 of the table pack.

Ethnic group

The ethnic group to which respondents consider that they belong. The FRS questions are in line with Government Statistical Service (GSS) harmonisation guidance. The categories are:

• White
• Mixed or Multiple ethnic groups
• Asian or Asian British
• Black or African or Caribbean or Black British
• Other ethnic group.

For Northern Ireland, ‘Irish Traveller’ is included in ‘Other ethnic group’. For England, Wales, and Scotland, ‘Gypsy or Irish Traveller’ is included in ‘White’.

‘Arab’ has been included in ‘Other ethnic group’ due to small sample sizes.

Ethnic background is self-declared; data is available for known declarations and excludes ‘choose not to declare’ and ‘unknown’.

Family Resources Survey (FRS)

The FRS is one of the largest cross-sectional household surveys in the country. From April 2011, the target achieved UK sample size for the FRS was reduced by 5,000 households from 25,000 to 20,000 households a year. It should be noted that due to COVID-19, there was a smaller achieved sample size in FYE 2021 and FYE 2022. In FYE 2024, the achieved sample size was around 17,000. Prior to FYE 2003 the survey covered GB; from FYE 2003 the survey was extended to cover the UK.

Gross income

Total income a pensioner receives from all sources before any outgoings, tax, or housing costs.

Head of pensioner unit

If the Household Reference Person (HRP) does not belong to the pensioner unit, then the Head of the pensioner unit is simply the first person from that pensioner unit, in the order they were named in the interview. If the HRP does belong to the pensioner unit, they are also the Head of that pensioner unit.

Household

One person living alone or a group of people (not necessarily related) living at the same address who share cooking facilities and share a living room or sitting room or dining area. A household consists of one or more benefit units.

Household Reference Person (HRP)

The highest income person in a household.

• in a single-adult household, the HRP is simply the sole householder (ie, the person in whose name the accommodation is owned or rented)
• if there are two or more householders, the HRP is the householder with the highest personal income, taking all sources of income into account
• if there are two or more householders who have the same income, the HRP is the elder

Before April 2001, the HRP was known as the Head of Household. Where we refer to ‘Head’ in tables relating to households, this is the HRP. The Head of the pensioner unit will not necessarily be the HRP (see Head of pensioner unit).

Housing costs

Housing costs are made up of rent (gross of housing benefit), water rates, community water charges and council water charges, mortgage interest payments (net of tax relief), structural insurance premiums (for owner occupiers), and ground rent and service charges.

Net incomes in PI are presented either on a BHC or AHC basis, the definitions of which are:

• before housing costs (BHC): Net income before the housing cost aspects listed above are taken away.
• after housing costs (AHC): Net income after the housing cost aspects listed above are taken away.

Capital mortgage repayments are not deducted as a Housing Cost as this is regarded as an asset being accrued and not a cost.

In a multi-benefit unit household, housing costs are attributed to the first pensioner unit (the pensioner unit with the HRP). This means that for a minority of pensioner units, housing costs will not be attributed to them.

Income distribution

The spread of incomes across the population.

Marital status

This is the person’s marital status:

• married or civil partnership: currently married or in a civil partnership, and not separated from spouse (excludes temporary absences)
• cohabiting: not married nor in a civil partnership but living as a couple.
• single: is not currently cohabiting and is not married nor in a civil partnership.

Mixed-age pensioner couples

A couple where one member is above SPa, and the other is below. Used in comparison with couples where both members are over SPa.

Net income

Net income is gross income with direct taxes including Council Tax payments deducted. Net income may be presented on a BHC or AHC basis. See ‘Housing costs’ for more detail.

Occupational pension

An occupational pension scheme is an arrangement an employer makes to give their employees a pension when they retire. Employees may become a member of an employer’s pension scheme on a voluntary basis. Until 6 April 2016, Defined Benefit occupational pension schemes could be contracted into or out of the Additional State Pension. This was abolished with the introduction of the New State Pension. The contracting out of Defined Contribution occupational pension schemes was abolished in 2012.

Pensioner unit

Benefit units who are a pensioner couple, single male pensioner, or single female pensioner. Pensioner benefit units may also include any dependent children, but this is uncommon. In FYE 2024, just over half a per cent of pensioner units included dependent children.

Pension Credit

An income-related benefit made up of Guarantee Credit and Savings Credit. Guarantee Credit tops up the claimant’s income to a guaranteed level. Savings Credit is an extra amount for people who have made provision for their retirement above a certain threshold. Savings Credit was abolished for new claimants on 6 April 2016, so most people who reached SPa after 6 April 2016 are not eligible for Savings Credit. New claims for Savings Credit can still be made by pensioner units who have reached SPa prior to 6 April 2016.

Personal pension

A pension provided through a contract between an individual and the pension provider. The pension which is produced will be based upon the level of contributions, investment returns and annuity rates. A personal pension can be either employer provided or privately purchased. Different forms of personal pension include:

• Group Personal Pension: Before automatic enrolment, some employers who did not offer an occupational pension scheme may have arranged for a pension provider to offer their employees a personal pension instead. The employer may have negotiated special terms with the provider that means the administration charges are lower than those for individual personal pensions. Although they are sometimes referred to as company pensions, they are not run by employers and should not be confused with occupational pensions, which have different tax, benefit, and contribution rules. Note that some companies may still offer Group Personal Pensions in addition to their occupational pensions.
• Group Stakeholder Pension: As with Group Personal Pensions, an employer can make an arrangement with a pension provider and offer their employees a Group Stakeholder Pension (see Stakeholder Pension).
• Stakeholder Pension: Enables those without earnings, such as non-earning partners, carers, pensioners, and students, to pay into a pension scheme. Almost anybody up to the age of 75 may take out a stakeholder pension and it is not necessary to make regular contributions.

Read more information on personal pensions.

Private pension

Private pensions include occupational pensions (also known as Employer-Sponsored pensions) and personal pensions (including Stakeholder pensions). People can have several different private pensions at once. In previous years only one of these pensions could be contracted out. The contracting out of Defined Benefit occupational schemes was abolished in April 2016 with the introduction of the New State Pension. The contracting out of Defined Contribution pension schemes was abolished in 2012.

Region

Regional classifications are based on the standard statistical geography of UK Regions, as defined by ONS: nine in England, and a single region for each of Wales, Scotland, and Northern Ireland. Tables will also show statistics for the UK, GB, and England as a whole.

Read more information on geographical terms used in official statistics.

Disaggregation by geographical regions is presented as three-year averages. This presentation has been used as single-year regional estimates are considered too volatile. Estimates for the UK, however, are shown as single-year estimates for the latest available year. Although the FRS sample is large enough to allow some analysis to be performed at a regional level, it should be noted that no adjustment has been made for regional differences in the cost of living, as the necessary data is not available.

Sampling error

The uncertainty in the estimates which arises from taking a random sample of the household population. The likely size of this error for a particular statistic can be identified and expressed as a confidence interval.

Sources of income

• benefit income: including State Pension, income-related benefits, and disability benefits, as well as other types of benefits such as Winter Fuel Payments and Carer’s Allowance
• occupational pension income: including employee pensions associated with an employer and workplace
• personal pension income: including personal pensions, annuities bought with lump sums from personal pensions, trade union and friendly society pensions
• investment income: including interest from Individual Savings Accounts (ISAs) and other savings accounts, unit trusts, bonds, stocks, and shares
• earnings income, including:
  • wages and salaries: for a respondent currently working as an employee, income from wages and salaries is equal to gross pay before any deductions, less any refunds of income tax, any motoring and mileage expenses, any refunds for items of household expenditure and any Statutory Sick Pay or Statutory Maternity Pay, plus bonuses received over the last 12 months (converted to a weekly amount) and any children’s earnings from part-time jobs
  • self-employed income: the total amount of income received from self-employment gross of tax and national insurance payments, based on profits (where the individual considers themselves as running a business) or on estimated earnings or drawings otherwise. Excludes any profits due to partners in the business. Any losses are recorded as such. From FYE 2022, income received from director’s dividends is included in the estimates following an addition to the FRS. From FYE 2023 they are only included where directors are classed as employees or self-employed and using business income as the basis of earnings (but not if self-employed and using profit and loss). This followed a methodological review. The income is treated as income from earnings
• other income: benefits from friendly societies, income received for dependent children, maintenance payments and from August 2020, free TV licences for those aged 75 and over who received Pension Credit. From FYE 2023, this includes wider support Cost of Living Payments such as the Warm Home Discount

The below applies to FYE 2021 and FYE 2022 data only:

The calculation of self-employed income and therefore total individual income does not directly include grants received from SEISS.

Wages are treated as earnings income rather than state support, irrespective of any support payments from the CJRS that the respondent’s employer was receiving in respect of their employment.

In FYE 2024, Cost of Living Payments and wider support schemes were included as part of the income variables on the Family Resources Survey (FRS) dataset and are therefore also present in the PI data. PI data tables using variables that include the calculation of pensioner unit income reflect the Cost of Living Payments that the pensioner unit received. This includes: Pensioner Cost of Living Payment, Disability Cost of Living Payment, low income benefits and tax credits Cost of Living Payment, and the Warm Home Discount For more information, please see the FRS background information and methodology. 

State Pension

The State Pension is a payment made to qualifying individuals who have reached SPa. A new single-tier State Pension launched on 6 April 2016 for people who reached SPa on or after April 2016, to replace the previous system. This consolidated the Basic State Pension and Additional State Pension into one single amount.

People who reached SPa before 6 April 2016 continue to receive the Basic State Pension and Additional State Pension if eligible. Read more information on the State Pension.

State Pension age (SPa)

SPa is the earliest age you can start receiving your State Pension. For FYE 2024 data, individuals are defined to be of SPa based on their date of birth and the date of interview. Since 6 April 2010, the SPa has been gradually increasing. The FRS data contained in this report were collected throughout the FYE 2024, during which the SPa for pensioners remained at 66 years, the same as FYE 2023. Proposed increases to the SPa are expected to be phased in between 2026 and 2028, bringing the SPa up to 67 years.

A breakdown of the increases can be seen in the State Pension age timetables and details of planned changes to SPa can be found online. Read further guidance on calculating State Pension eligibility age.

State support

An individual is in receipt of state support if they receive one or more Benefits or are being paid Tax Credits.

Tax Credits

Working Tax Credits and Child Tax Credits are paid by HMRC. Tax Credits are being phased out, as they are being replaced by Universal Credit.

Read more information on tax credits.

Triple lock

The Basic State Pension and the New State Pension increases every year by whichever is the highest of the following:

• earnings - the average percentage growth in wages (in GB)
• prices - the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI)
• 2.5%

In FYE 2024, the increase was 10.1%, in line with CPI inflation as of September 2022.

Working age

Adults (see “Adult” and “Child”) under SPa.

Note, our statistical practice is regulated by the Office for Statistics Regulation (OSR).