U.K. Workers See Incomes Stagnate as Generational Gap Widens

(Bloomberg) -- Since the financial crisis, it pays to be old in the U.K.

While the disposable incomes of retired households have risen 15 percent since 2008 in real terms, for working households it’s been almost a decade of stagnation.

Median U.K. household disposable income rose 5.7 percent to 27,170 pounds ($35,570) in the 12 months through March from its pre-crisis level, the Office for National Statistics said in a report on Friday. But that gain masks disparities between older Britons and working households, whose 0.3 percent increase lagged the surge enjoyed by retirees.

The data may fan the long-running debate on inequality between the generations. It comes after the government brought forward plans to raise the age at which citizens can claim the state pension as it seeks to grapple with the mounting costs of people living longer. British workers may be facing the longest period of wage stagnation in at least 70 years as faster inflation and years of austerity eat into household finances.

The U.K. government said this month that a planned increase in the pensionable age to 68 will start in 2037, seven years earlier than previously proposed. The change will affect people born between 1970 and 1978, meaning the children of the baby-boomer generation will now have to work longer to help fund their parents’ retirement.

Just weeks before, Prime Minister Theresa May abandoned plans to scrap the so-called “triple lock” that guaranteed relatively generous annual increases to the state pension by linking them to inflation, wage growth, or 2.5 percent, whichever is greatest.

To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net.

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Lucy Meakin, Fergal O'Brien