Pension wealth increasing

New data from the Office for National Statistics (ONS) Wealth and Assets Survey1 has revealed that the largest single component of household wealth is private pension holdings.

In the latest recorded period (April 2018 to March 2020) pensions represented 42% of aggregate wealth, up from 34% (2006-08), an increase in pension wealth of nearly £70k on average for UK households. This growth can be attributed to various factors including more households having private pensions due to auto-enrolment and rising longevity meaning pension savings have increased proportionally. Meanwhile, property wealth (minus mortgage debt) made up 36% of household wealth; financial wealth, or savings or investments, made up 13%; and physical wealth, such as cars and house contents, totalled 9%.

Underlying wealth per household for the latest recorded period was £302,500 at the median or midpoint level, which is up from £286,600 in the previous two years, and up by a fifth over the past 14 years, when adjusted for inflation. The data also shows median wealth was highest for households where a member was aged between 55 years and State Pension age; the figure of £553,400 being 25 times higher than for those aged 16-24 years of age. The wealthiest 10% of households held 43% of all the wealth, whereas the bottom 50% held only 9%.

1ONS, 2022

The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.