ONS Pension Trends Survey

According to the Pension Trends Survey published by the Office for National Statistics;

• Mean annual state benefit income (comprising state pensions and related benefits) for pensioner couples was £7,296, compared with £5,259 for single men and £5,496 for single women.
• Mean annual private pension income of pensioner couples was £2,115, while for single men it was £1,533 and for single
women £1,238.

UPDATE 23/5/08 - they have now admitted that the private pensions figures were out by a factor of 4, which dilutes the logic of what follows, but hey ...

Hmm. A bit strange that the mean state pension for men is lower than for women, given that men have more years' contributions and earn more, so ought to have more SERPS/S2P. Indeed, men get on average 90% of the BSP but women only get 75%. Hold that thought for now...

The 'mean' private pension is the mathematical average of all pensions paid out. Per the FT, the median figures were £1,350 (couples), £836 (single men) and £700 (single women).

Let's take a single man then, with the median private pension of £836 (£16 a week), 90% of the Basic State Pension (£81) and an average SERPS/S2P of £20. That adds up to £117 per week ... so he's also entitled to £7 Pensions Credit to bring him up to £124.

In other words, for over half of pensioners, saving into an employer or private pension scheme was a complete waste of money, because all it does it reduce the Pensions Credit (which is reduced by £1 for each £1 of other income!) that they would have got anyway!

This also explains why women get more state pensions than men, the total pension income that either ends up with is pretty much the same - £5,259 plus £1,533 = £6,832 (single men) and £5,496 plus £1,238 = £6,734 (single women).