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Just 10% of people hold half of all UK wealth

Written by: Emma Lunn
Wealth is unevenly distributed between individuals in the UK, with the wealthiest 10% estimated to hold about half of all wealth, according to the Office for National Statistics (ONS).

The ONS’ Wealth and Assets Survey found the median total wealth for individuals in the UK was estimated to be £125,000 between April 2018 and March 2020. The mean was higher at £305,000, reflecting the uneven distribution of wealth across the population. 

Wealth inequality has remained stable over the past 14 years, with the richest 1% having wealth of £3.6m and the least wealthy 10% having £15,400 or less.

The ONS also found big disparities in wealth between the north and south, and young and old. Between April 2018 and March 2020, median individual wealth was £157,000 higher in the South East than the North East of England and this regional disparity has increased over time.

On average, individual wealth increases with age, peaking in the 60 to 64 age group at a level nine times as high as the 30 to 34 age group. It then falls in older age groups as people use their wealth to support life in retirement.

While age was the best predictor of individual wealth, wealth was also lower for women, those with a longstanding illness or disability, identifying as bisexual, or from several ethnic minority groups.

An individual’s education and the way they make a living are also important factors for their wealth prospects, with positive associations modelled between wealth and degree-level qualifications, higher socioeconomic class occupations and public sector employment.

Both property and pensions together make up three quarters of all wealth.  But over the past 14 years, partly down to lower levels of home ownership among younger people, the introduction of auto-enrolment and the increase in the state pension age, private pension wealth as a proportion of all wealth has increased.

It has gone up from 34% in 2006 to 2008 to 42% in 2018 to 2020, while property wealth fell to 36%, from 42% over the period.

Becky O’Connor, head of pensions and savings at Interactive Investor, said: “Property gets a lot of glory, but pensions can be the quiet secret to wealth accumulation. Thankfully, because of auto-enrolment, more people are in on them than ever, giving access to long-term investment growth at a time when property price growth has meant the barriers to entry for home ownership have risen.

“Unfortunately, much of the pension wealth in the UK is in the form of generous defined benefit pensions, which many older people still have, but are quickly disappearing. It will be harder for younger workers with defined contribution pensions to build their wealth up to such levels.

“All forms of wealth are not equal and can serve different purposes and give different kinds of material comfort. You can live in a house, but you can live on a pension. Some people in the UK now find themselves ‘asset rich’ and living in a valuable home, but cash poor, with low income to actually cover living costs, perhaps through not having sufficient pension income. Ideally, of course, you’d like both.”

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