Pensions outstrip property in driving household wealth

● Overall assets up to £11.5 trillion from £8.5 trillion in year of financial crash

Overall wealth in the UK has grown 4.5 per cent a year since the financial crash, from £8.5 trillion to £11.5 trillion, a new report out today from a leading City institution shows.

The report says that the top 10 per cent of Scottish households have total wealth of £977,000, covering stocks and shares, physical wealth such as art and cars, pension assets and property (net of any mortgage).

Today’s report commissioned by wealth manager Kleinwort Hambros says: “Contrary to popular belief, this wealth is concentrated in pensions rather than property.

“Indeed, pension wealth is almost 180 per cent higher than property wealth for the richest households in Scotland.”

The report, based on data from the Wealth and Asset Survey and additional research from the Centre of Economics and Business Research (Cebr),added: “Pensions tend to be invested in financial assets such as equities, which have had a stellar performance since the global financial crash of 2008. Real assets such as property did not grow nearly as fast.”

Dumfries & Galloway is ranked eighth in the top ten wealthiest households across Britain with an average household total wealth of £1.57 million.

Chris Thomson, Head of Kleinwort Hambros’ Edinburgh office, said: “The findings of our research contrast with the view that investing in property is the most popular form of saving.

“We have found that it is pensions which represent the biggest store of value for the wealthiest households in Scotland. However, these findings are completely in line with performance trends following the global financial crash of 2008.

“The FTSE 100 Total Return, for example, has averaged 10.6 per cent since 2009, against a national average of 3 per cent annual capital growth for property.

“Even allowing for a 3 per cent yield from property, financial markets have outperformed bricks and mortar by a considerable margin since 2008.”

Wealth for the richest households in Great Britain increased by 45 per cent on average, leaving the top ten per cent of households with at least £1m spread across a range of assets from property to pensions.

Thomson added: “While it comes as no great surprise that highest household wealth is concentrated in districts which are predominantly in the South East (of England), we are seeing significant wealth being generated in Scotland which is closing the gap.

“Aside from Dumfries and Galloway, Edinburgh and Midlothian are areas where households in the top decile hold at least £1 million in aggregate wealth. In these areas, in particular, we are seeing a rise in entrepreneurial wealth, as well as a greater concentration of professionals and executives, all driving wealth and asset creation.”