Pensions are now a bigger wealth accumulation than the official figures for property, as younger people struggle to find a home


More wealth is built on pensions than property, especially among the country’s best, new official figures show.

Wealth per household was £ 302,500 at the average or mid-point level in 2018-2020. That is up from £ 286,600 in the previous two years and a fifth more when adjusted for inflation over the past 14 years.

According to recent research by the Office for National Statistics, pensions account for 42 per cent of wealth in Britain and asset – minus mortgage debt – represents 36 per cent.

What do we have? Pensions are a larger component of total wealth than property

Financial wealth, or savings or investments, accounted for 13 percent and physical wealth, such as household goods and cars, accounted for 9 percent.

But a large share of your wealth depends on how much you have collectively, the most important asset for the poor, the property for the middle-class families, and the pension for the country’s wealthy.

The above hasn’t changed much from 2016-2018, but ONS says it has changed over the past 14 years, with pensions now the largest component of total wealth rather than property.

Reasons for this change include lower levels of home ownership for younger people, the introduction of various pension pot assessments and automated enrollment, and an increase in the state pension age, which will enable people to contribute to their pensions in the long run, according to the ONS.

But despite the large pockets of the country’s wealth despite pensions, there are widespread disparities between older generations, with many poorer pensioners relying on state pensions and benefits.

Source: Office of National Statistics

Source: Office of National Statistics

There has been a huge uproar over the government’s decision to suspend the ‘triple lock’ guarantee on state pension increases and increase it to 3.1 per cent this year.

And rising inflation, especially the rise in fuel prices, is causing increasing concern for elderly people struggling to pay their bills.

Meanwhile, Jason Hollands, managing director of BestInvest, points out that in recent years, the value of pensions has risen in the wake of the rise in global stock markets.

They say the ONS figures reflect the growing pressure on workers to make their own financial provisions for retirement.

Source: Office of National Statistics

Source: Office of National Statistics

‘As final pay or defined benefit pension plans are closed to new members and the state’s pension eligibility has been consistently lowered, the public is wary of the need to focus on their own savings and investments. Comfortable retirement.

‘Self-enrollment has certainly helped in this, which has led to a huge growth in defined contribution pensions and a large number of people becoming first-time investors.’

Sarah Coles, senior personal finance analyst at Hargreaves Lansdowne, says: ‘The divide between rich and poor is not increasing, but it is still eye watering.

‘The richest 10 per cent of households have 43 per cent of all wealth and at least half of the country owns only 9 per cent. The country’s 1 per cent mega-rich own an average of £ 3.6 million.

While pensions are an important part of the difference, whether you have gone up the property ladder can cause a huge divide between the very least and the wealthiest.

‘Property wealth is the second largest component of overall wealth – 36 percent. The very wealthy are more likely to own their home, but those with less property are more likely to struggle to buy their first property.

Source: Office of National Statistics

Source: Office of National Statistics

‘This is one reason why older people have more wealth than younger people who have to climb a mountain to get their first property.’

ONS data shows that average wealth is highest in families, where members are 55 years old and the state pension age is £ 553,400 – 25 times higher than those aged 16-24.

Meanwhile, the average wealth of the home is the highest in the Southeast at £ 503,400 – an increase of 43 per cent since 2006 after adjusting for inflation – and the lowest in the Northeast at £ 168,500.

Top SIPPS for DIY Pension Investors

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