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.
Simon Read: Readers think I should cough up and pay for a tradesman's travelling time
No television licence leads to debt woes after court fines add up
Mark Dampier: Small can be beautiful for those investors who think long term
Tax boost for social investment will unlock £500m
Five ways to make money on the internet
- 1 Cameron's freebie to apartheid South Africa
- 2 Is this the scariest advert ever? Japanese tyre commercial comes with its own disclaimer and health warning
- 3 Sherlock series 3: Benedict Cumberbatch and Martin Freeman provide teasers for the biggest comeback in British television
- 4 A forgotten episode in Russian history leaves links with the Philippines
- 5 People will try to reduce Mandela to a lilting reggae tune about ‘love’. They will fail
- < Previous
- Next >
iJobs Money & Business
£80000 - £100000 per annum + benefits + bonus: Harrington Starr: Project Manag...
£50000 - £60000 per annum + benefits + bonus: Harrington Starr: Business Analy...
£30000 - £40000 per annum + Bonus and Benefits: Harrington Starr: A global Con...
£150 - £250 per day: Cornwallis Elt : iPhone Rollout- Blackberry Enginee...
Day In a Page
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.
A six-bedroom detached period property with secluded gardens, ample parking and a double garage in Rye, £675,000.
A large split-level property with three double-bedrooms and roof terrace, close to Crouch End Broadway, £625,000.
A charming barn conversion in the picturesque Cotswold village of Ilmington with three bedrooms, a detached garage, workshop and beautifully manicured gardens £675,000.
A three-bedroom new build, ground-floor flat with two bathrooms, close to Bermondsey tube, £445,000.
A three-bedroom house in an enviable new development moments from Oxshott High Street, with secluded garden and decked area, £385,000
A two-bedroom split-level flat with stunning south-west facing roof terrace in the popular Brondesbury Conservation Area, £549,950.
A charming 16th century, three-bedroom detached house in Bidborough with picturesque garden