Are pensioners getting richer? Or is it apples and pears?

I've seen it suggested in quite a few places that pensioners are getting richer. And, apparently, that is what the data shows. Most recently I saw Andy Haldane of the Bank of England, writing in the Sunday Times, use this fact as an argument for why he wasn't too worried about pensioners getting low interest rates on their savings in comparison with the needs of the economy as a whole.

Fuel for the inter-generational wealth debate, I suppose. A debate that includes the difficulty of getting on the housing ladder, for example. Personally, I think that one is about basic supply and demand. We don't build enough houses, so it's getting harder to buy. Funny how people seem to forget economic basics. So while I feel sympathy for young folk trying to get on the housing ladder, I also remember us paying an interest rate of typically 11% (and sometimes up to 15%) on a mortgage that was a whacking great proportion of our 1970s take home pay. And not being able to afford to buy a washing machine (no credit cards then, kids!). It certainly felt hard then, guys!

But to return to pensioners. How can they be getting richer? Well, some are asset rich and the value of their houses and other assets could be going up. But not many have large investments in the kind of assets for which the value has been pumped up by the Bank of England's quantitative easing. While that QE and low interest rates has kept interest rates on cash savings (which is what most pensioners will have I guess) at long term record lows. Something doesn't feel right here.

And it isn't. Think about what this comparison means for a moment. You can't compare the same group of pensioners after 5 and 10 years for the obvious reason that a proportion of them will have pegged it. And in the meantime a new group has retired. So if you take "pensioners" as a group over an extended timescale a bunch of folk mainly in their 80s will have been replaced by a younger cohort. Who are:
1. more likely to be wealthier anyway as people born in the 1950s are, on average, wealthier than people born in the 1930s
2. much more likely to have an occupational pension, so will have a higher income than the older group, many of whom rely entirely on the state old age pension.

So guess what? Pensioners as a group get richer.

Are individual pensioners getting richer? Yes they have benefited from the "triple lock", which I find hard to justify when wealthy pensioners get showered with non-means tested benefits (winter fuel, bus passes, TV licences for over 75s). But in broad terms, my guess would be not many are getting richer and not by much where they are. Obviously the few very wealthy people have the opportunity to get even wealthier and the Bank's policies probably help them. But that has nothing to do with age and, unless you are a class warrior - and they do seem to be re-emerging like wooly mammoths from the ice don't they? - that group has little relevance to policy making, apart from making sure that they stay here and pay their taxes. And as a group they do, and a very large amount it is.

So "pensioners getting richer" is yet another misleading statistic. True for the group, but it isn't the same group over time. Another case of comparing apples and pears. And getting a banana.