The rich get richer as pension pots grow

The wealthiest 10 per cent are now 500 times richer than the bottom 10 per cent – and the gap is growing

The wealth gap between the rich and poor has widened dramatically as the well-off have seen their pension funds soar, according to official figures published this week.

The Office of National Statistics reported that the 10 per cent of households with the highest levels of pension wealth had almost seven times as much as households in the bottom 50 per cent combined.

Meanwhile the richest 10 per cent of Britain's households are more than 500 times wealthier than those in the bottom 10 per cent. Families in the top bracket had a total wealth of £4.5 trillion in 2008/10, the most recent figures available. Those at the other end of the scale only had £8bn.

The figures confirm that the golden generation now retired or close to it has been able to cash in after enjoying unprecedented pension payouts and property growth.

But, alarmingly the figures revealed that the wealth gap is likely to widen in the future as fewer people than ever save adequately for retirement. Two years ago just a third of people contributed to a pension. That figure is likely to have shrunk since then as times have got harder, money tighter, and work harder to find.

Danny Cox, financial adviser at Hargreaves Lansdown, said: "There's a growing wealth gap because generally people are either spenders or savers. The spenders rarely save –often because they can't afford to – and therefore the accumulation of wealth is limited to modest pension contributions and perhaps the rise in value of their home.

"The savers benefit twofold: they spend less than they earn and save the difference; and then the more they save, the more they benefit from the compounding of interest and investment growth over time."

Backing that up, the ONS figures show that the 18 per cent of people who had saved into and cashed in a private pension by 2010 had an average pension wealth of £79,400. Those without pension savings would have had to rely on the state pension –which at the start of 2010 stood at just £95.25 a week, or £4,954 a year. One in four households had no private pension wealth whatsoever.

The figures also revealed a stark contrast between traditional final salary pension schemes and their replacements, the so-called defined contribution schemes, which are linked to how much you've paid in rather than how much you earn.

The average wealth held in final salary schemes which had yet to be cashed in was £93,900. But the average amount in defined contribution pensions was just £16,000.

The Wealth in Great Britain study also looked at the value of people's possessions, homes and finances. It found that while private pension wealth has increased as a proportion of total wealth in recent years, property wealth has actually decreased as a share as the housing market has remained stagnant.

The contributions of financial and physical wealth have remained fairly stable, the report found.

The total wealth of Britain's households reached £10.3trn in 2010, up from £9.1trn two years earlier. Mean average household wealth grew to £418,000 from £373,000.

But the report confirmed the widening north-south divide. Families in the South-east were best off, with an average wealth of £562,000, but those in the North-east were worst off, with a total wealth of £322,000.

Independent Partners: 10 top tips for retirement. Get your free guide here

News
i100
News
Bobbi Kristina Brown, daughter of the late singer Whitney Houston, poses at the premiere of
people
News
people
News
The frequency with which we lie and our ability to get away with it both increase to young adulthood then decline with age, possibly because of changes that occur in the brain
scienceRoger Dobson knows the true story, from Pinocchio to Pollard
Voices
The male menopause: those affected can suffer hot flushes, night sweats, joint pain, low libido, depression and an increase in body fat, among other symptoms
voicesSo the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Life and Style
health
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: DBA Developer - SQL Server

    £30000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...

    Recruitment Genius: Customer Service Administrator

    £13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...

    Recruitment Genius: Dialler Administrator

    £22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...

    Ashdown Group: Contracts Manager - City of London

    £35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...

    Day In a Page

    Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

    US betrayal of old ally brings limited reward

    Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
    VIPs gather for opening of second Suez Canal - but doubts linger over security

    'A gift from Egypt to the rest of the world'

    VIPs gather for opening of second Suez Canal - but is it really needed?
    Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

    Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

    Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
    The male menopause and intimations of mortality

    Aches, pains and an inkling of mortality

    So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
    Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

    'How can I possibly be on the list with these writers I have idolised?'

    Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
    Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

    Bettany Hughes interview

    The historian on how Socrates would have solved Greece's problems
    Art of the state: Pyongyang propaganda posters to be exhibited in China

    Art of the state

    Pyongyang propaganda posters to be exhibited in China
    Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

    Vegetarian food gets a makeover

    Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
    The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

    The haunting of Shirley Jackson

    Was the gothic author's life really as bleak as her fiction?
    Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

    Bill Granger's seaside-inspired recipes

    These dishes are so easy to make, our chef is almost embarrassed to call them recipes
    Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

    Tourists are limp, leaderless and distinctly UnAustralian

    A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
    Blairites be warned, this could be the moment Labour turns into Syriza

    Andrew Grice: Inside Westminster

    Blairites be warned, this could be the moment Labour turns into Syriza
    HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

    The mystery of Britain's worst naval disaster is finally solved - 271 years later

    Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
    Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

    'I saw people so injured you couldn't tell if they were dead or alive'

    Nagasaki survivors on why Japan must not abandon its post-war pacifism
    Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

    The voter Obama tried hardest to keep onside

    Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen