Private pension wealth is the largest component of household wealth, marginally bigger than total property wealth, and its value has increased by more than that of property wealth too. This reflects a slight cooling in the housing market, while the valuation of pension assets has been pushed up by rising longevity and continued low interest rates (affecting defined-benefit schemes), and more people being auto-enrolled into workplace pensions.
Of £6.1tn pension wealth in the UK, c. *half* is pensions in payment (stuff being paid out to retirees), rest is stuff being paid into, or preserved (after a job move or smthg). https://t.co/btpiZV0nuF pic.twitter.com/GEvVDpmrLs
— Toby Nangle (@toby_n) December 7, 2019
For pensions in payment, the *median* pension wealth numbers are large – particularly if you are male. They grew by 17% over the last 2yrs (almost all growth accounted for by falling bond yields). pic.twitter.com/jy2MpD5Owa
— Toby Nangle (@toby_n) December 7, 2019
How about active pension wealth? Over 4/5 of this is accounted for by Defined Benefit schemes. pic.twitter.com/6ZOZlaHK1M
— Toby Nangle (@toby_n) December 7, 2019
So difference (call it £3.5tn?) is going to be the promise to pay UK DB public sector occupational pensions. But UK Whole of Govt A/cs put the number at £1.9tn. Missing £1.6tn? Dunno. https://t.co/AL5MdFtoC5 pic.twitter.com/kUzqhfGBsT
— Toby Nangle (@toby_n) December 7, 2019
But wait – didn’t DB schemes all shut down? Here’s a chart from the Pensions Regulator’s most recent Purple Book. Only 12% of private sector DB schemes are still open. https://t.co/pBzGdHukwP pic.twitter.com/T0pHmnDXUn
— Toby Nangle (@toby_n) December 7, 2019
But public sector DB schemes are open. So there are actually many members of DB plans. Slightly more than DC plan membership, even after auto-enrollment. pic.twitter.com/R7jzQMQ4vt
— Toby Nangle (@toby_n) December 7, 2019
Which adds up to a pension landscape that few in wealth management will recognised
Further reading
Thanks to the ONS and the Resolution Foundation’s study “who owns all the pie?”
The ONS total wealth and assets survey (2019) can be read from here
