Median pension wealth is worryingly low but the story is complicated

Median pension wealth is worryingly low but the story is complicated

The Wealth and Assets survey is the most comprehensive assessment of household wealth in Great Britain undertaken by the Office for National Statistics (ONS).

The latest wave of the survey has just been released which has given the International Longevity Centre the opportunity to explore the state of the nations’ wealth and how it has changed since previous waves. Here they set out four key things we learned from the latest wave.

  • During the period 2010-12, median total pension wealth for all those who have saved something into a pension was £46,900.
  • According to the Legal and General annuity calculator, this could provide an annual income of £2,659 over the course of retirement. In effect then, this would only provide enough income to top up that gained through the state pension.
  • If median pension wealth is calculated by including those who have no pension wealth it falls just £7,200! This is driven by the 36% of adults who have no private pension savings.

…pension wealth is higher for older groups but remains inadequate

  • Amongst the 55-64 age cohort, total median pension wealth is £135,900 after excluding all individuals who have saved nothing.
  • Using the same annuity calculator that could deliver an annual income of £7,638 – a significant improvement on the overall median, though still woefully short of what is needed to secure an adequate income in retirement.
  • And even amongst this older age cohort, 28% of individuals have no pension savings whatsoever which is very worrying.

..Gender divides remain stark

  • 37% of women amongst the 55-64 age group have no private pension wealth compared to 19% of men.
  • Median pension wealth for those who have some pension savings, is far lower for women of this age group at just £99,100 compared with £173,100 for men.

don’t forget younger age cohorts

  • The younger age groups (16-44) were the only age groups to experience a fall in total pension wealth since the last wave of the survey.

Property wealth remains king for many households

  • Property wealth remains the largest component of total household wealth across deciles and the most evenly distributed (see chart).

…but property accounts for a lower proportion of total wealth that it did

  • Despite property accounting for such a high proportion of peoples’ total wealth, it has declined since the first wave in 2006/08, while pension wealth has increased.

Savings account…get me out of here

  • The proportion of people with a savings account has fallen from 68% to 58% since the last wave.

Beware of regional differences

  • Total wealth in London has risen by over 30% since the 2006/08 wave by comparison to a fall of 10% in the North East.

Ben Franklin, Senior Researcher at the International Longevity Centre – UK (ILC-UK), said 

“The latest wave of the Wealth and Assets Survey gives us the chance to explore the state of the Nation’s wealth. The data reflects many of the challenges facing people up and down the country today in the wake of a stagnant economy.

“Saving enough for retirement is proving tough for those of all ages but particularly so for women and younger age groups. Housing wealth remains the only game in town and there has been a drop in the proportion of people with savings accounts, perhaps reflecting the substantial falls in real incomes over the last few years.

“London is continuing to stride ahead from the rest. Economic recovery should help to give a boost to the nation’s wealth in the years to come but only if the gains are shared equitably across different groups within society and across all regions of the UK.”