`Low earners lose out on investment'

THE RICH get richer and the poor get poorer because of a huge gulf in knowledge about savings and investments, a think-tank said yesterday.

Limited knowledge about savings schemes and lack of access to suitable investment products exacerbates the inequality of wealth, the Joseph Rowntree Foundation said.

In-depth surveys of 40 families showed that those with a sophisticated level of knowledge were likely to be middle-class, actively saving and working in the financial services industry.

Those with an adequate or limited level of knowledge felt less need of information and felt they had enough for their current circumstances.

It said official figures showed half of all families had accumulated wealth in excess of pounds 53,000, including pension rights, housing wealth and savings.

Among pensioners wealth was even greater, with average wealth of pounds 133,000. But it revealed people under 35 and lone parents had little wealth. Half of lone parents had no housing assets while half had no pension.

One of the authors, Karen Rowlingson, a senior lecturer at the University of Derby, said: "Our findings underline the need for policies that will enable people on low incomes to save and improve their pension entitlement."

She said initiatives such as Individual Savings Accounts (ISAs) and stakeholder pensions were steps in the right direction but criticised the lack of any element of compulsion in the proposals.