New ONS report provides a “state of the nation” analysis of where our wealth is tied up… showing some big variations depending upon where people live and their age as well as identifying some major shifts in recent years.

New figures from the ONS in their “Wealth and Assets Survey” reveal that more wealth is now tied up in pensions than in property. At March 2020, pensions made up 42 per cent of wealth in Britain, while property, once mortgage debt has been removed, represented 36 per cent. This represents a major shift over recent years, which could be explained by fewer people owning their own homes together with the introduction of automatic enrolment.

Savings and investments made up 13 per cent, while “physical wealth”, such as house contents and cars, made up a further nine per cent.

Median wealth per household in 2018-2020 was £302,500 – a marginal increase from £286,600 in the prior two years, but a leap of 20% (when adjusted for inflation) over the previous 14 years. However, these are very much median figures, and there are big disparities depending on where you live, whether you are employed or self-employed, and your age.

Some of the big variations include:

• The wealth of the richest 1% of households was more than £3.6 million, compared with £15,400 or less for the least wealthy 10%.
• Median wealth for households whose head was aged 55 years to under State Pension age was 25 times higher than those aged 16 to 24 years.
• Household median wealth was highest in the South East at £503,400, having risen 43% since 2006 (after adjusting for inflation); wealth was lowest in the North East at £168,500.
• Regions with the lowest median household wealth (North East and Scotland) saw a decrease in wealth compared with the previous period, of 7% and 12% respectively after adjusting for inflation; London also experienced a large decrease of 8% while the East and West Midlands saw the largest growth, at 14% and 13% respectively.

Older (sometimes) means wealthier…

Typically, wealth accumulates with age: the average age of first-time property buyers in England is 32 years, while participation in workplace pensions and the size of pension contributions corelates with income (which also increases with age). This means wealth is likely initially to build slowly before growing at a faster rate until retirement.

The wealthiest households (measured by the median) were those where the head was retired (£489,300). Almost three-quarters of households with a retired head owned their home outright, compared with less than 30% of self-employed and less than 20% of employee-led households.  However, averages are just that, and can mask huge variations: there are wide disparities among the older generations, with many poorer pensioners relying on the state pension and benefits.

Households where the head was self-employed were the next wealthiest group with median total wealth of £333,700, compared with wealth of £287,200 for households whose heads were employees.

Big regional variations emerge

As expected the wealthiest region of Great Britain in April 2018 to March 2020 was the South East, where median wealth was £503,400 having risen 43% since 2006 (after adjusting for inflation). The regions with the lowest median wealth were the North East (£168,500) and Scotland.

Although London had the lowest property ownership rate, low participation in private pensions and decreasing median wealth in the latest period, the region held 15% of all wealth in Great Britain. This is likely because of substantially higher property values in the region; median household net property wealth in the latest period for those owning property was £450,000, the highest among all regions.

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