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: Catch 22 for borrowers who are turned down by banks
No Pain No Gain: Small shareholders have been marginalised, but don’t give up
Simon Read: There may be trouble ahead for cohabiting couples who don’t make a will
Money Insider: Would £150 make you switch banks?
Bargain Hunter: Find the deals that have real value beneath the Black Friday hype
- 1 'Not suppost to cry': 9-year-old lists the worst things about being a boy
- 2 Iggy Azalea responds to Eminem rape lyrics: 'I'm bored of old men threatening young women'
- 3 Woman opens professional cuddling shop – gets 10,000 customers in first week
- 4 Lana Del Rey rape video: Marilyn Manson denies involvement in shocking leaked footage
- 5 Winnie the Pooh banned from Polish playground for being 'inappropriate hermaphrodite'
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Muslims pre-date Columbus in discovering America,' says Turkish president Erdogan
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
'Beast of Bolsover' Dennis Skinner takes Ukip MP Mark Reckless to task moments after he is sworn in
France 'blocks' Russian sailors from boarding a warship
Former Tory PM Sir John Major says 'we would not have an NHS without migrants'
iJobs Money & Business
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...
£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
Day In a Page
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens