What’s your pension wealth?

There is some interesting reading in the latest Office for National Statistics (ONS) Wealth and Assets Survey which reveals that the largest single component of household wealth is private pension holdings. If you are wondering how you can increase your pension wealth then read on.

The data, which was released in January 2022, looks at the time period from April 2018 to March 2020. During this time, pensions represented 42% of aggregate wealth, which is up from 34% in the April 2006 to March 2008 time period. You may be asking what this actually means in real figures? Well, it’s an increase in pension wealth of nearly £70k on average for UK households. This can make a real difference to your overall pension planning – to see the impact of this, head over to our pension calculator for a closer look.

Why is there so much wealth in pensions?

A number of factors are at play here. There’s no doubt that more people now have private pensions due to auto enrolment, which for employed people is a workplace pension – for a reminder visit our pension basics page.

People are also contributing for longer due to an increase in the State Pension age and we can all potentially expect to live longer as well, which means that pension savings have correspondingly increased proportionally. Many people have also benefited from investment market growth in recent years, seeing their plans increasing in value in many cases.

What about the booming housing market?

Property wealth (minus mortgage debt) is the second biggest component of wealth overall, making up 36% of household wealth in the most recent data; financial wealth, or savings and investments (less liabilities) made up 13%; and physical wealth, such as cars and house contents, totalled 9%.

We often get asked about the pros and cons of pensions versus property and whilst there are personal preferences and circumstances at play, we are firm believers that a well-diversified ‘basket’ of investments, starting as early as you can in life, is a good option for the long term.

Wondering how your wealth compares?

What makes up the biggest share of your wealth depends on how much you have overall. Pensions form the largest asset for the wealthiest, property is the biggest component for households in the mid-range, whilst belongings are the most significant assets for the poorest in the country.

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%. Understanding your wealth and planning ahead for retirement is key.

It can be difficult to understand whether you are on track to achieve retirement you want. A good first step is to take a look at our handy calculator which can help you look at what your current pension provision is as well as understanding what your State Pension entitlement is by clicking here.

If looking into the numbers and statistics is not your thing, and you’d like to speak with a real person to talk this through, then please get in touch. Our retirement experts would be delighted to have a conversation with you about how we can help. The first meeting is with our compliments, so please get in touch today.