Total private pension wealth increased to £5.3trn between July 2014 and June 2016, up from £4.4trn between July 2012 and June 2014, the Office for National Statistics has revealed.
In its latest Wealth in Great Britain bulletin, the ONS also revealed 49 per cent of individuals aged 16 to 64 had some form of active private pension that they were contributing to, up from 44 per cent in the previous period.
Furthermore, in the period, 66 per cent of employees were actively contributing to a private pension scheme compared with 25 per cent of self-employed, with median current pension wealth for employees being £33,000 compared with £21,000 for the self-employed.
Pensions now represent 42 per cent of total wealth, compared to property (36 per cent) and financial wealth (13 per cent). However, the vast majority of pension wealth falls to either those with pension in payment – who account for 47 per cent of pension wealth, or those currently in occupational defined benefit schemes (32 per cent). The amount of pension wealth attributed to those in accumulating pension savings in current defined contribution schemes is just 4 per cent of all pension wealth.
Hargreaves Lansdown senior pension analyst said: “Pensions cemented their position as the most significant contributor to UK household wealth. Whilst the government would love this to be a result of their programme to get people automatically saving for their retirement through the workplace, the amounts being saved are so small at present that the impact to these figures will be minimal.
“The chief contributor is actually a jump in the cost of providing guaranteed retirement income, with the knock on being that the notional value of any final salary pensions and pensions in payment were sent soaring. Those without the benefit of a final salary scheme or pension in payment still benefited, with the average managed pension fund rising nearly 9 per cent during the period.”
In addition, Barnett Waddingham senior consultant Malcolm McLean said: “There is a lot of good news in these figures. Total private pension wealth has increased and many more people of working age are contributing to a private pension arrangement than previously. There are some big discrepancies, however, between different groups. The self-employed are clearly falling behind their counterparts working for an employer and public sector occupational wealth continues to substantially exceed that in the private sector.”
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