Private pension wealth accounted for more than half (53%) of the growth in aggregate total wealth in the UK over a two-year period, according to recent survey from the Office for National Statistics (ONS).
The ONS’ Wealth and Assets Survey found that between the periods of July 2012 to June 2014 and July 2014 to June 2016, private pension wealth increased 20% to £5.3 trillion from £4.4 trillion. The report attributed some of this increase to market factors changing over this period, but said that even after this is taken into account, private pension wealth would still account for 41% of the change in aggregate total wealth.
The percentages of households with pension wealth held in defined contribution pension plans increased during the same two-year period, which the ONS said was driven by a rise in membership of occupational defined contribution plans. This rise is likely a result of automatic enrollment in workplace pensions, according to ONS, as participation in them has been increasing since 2012, when automatic enrollment was introduced as a provision of the Pensions Act 2011 and 2014. Meanwhile, the percentage of households with wealth in all other types of private pension remained largely unchanged when compared with July 2012 to June 2014.
Although membership of current occupational defined contribution plans increased between July 2012 to June 2014 and July 2014 to June 2016, the median value of wealth held in those plans decreased during this period for almost all age groups, according to the survey. The ONS said this is a result of the increase of occupational defined contribution membership from automatic enrollment. It said that because these members have had less time to accumulate their wealth, they end up dragging down the median wealth of all current occupational defined contribution schemes.
Findings from the survey also suggest that the pension gender gap is continuing to widen, as males aged 25 to 34 years were the age group with the largest growth in membership during the periods covered in the survey. Between July 2014 and June 2016, 30% of men were contributing to a defined contribution plan, up from 20% during the period of July 2012 to June 2014. At the same time, participation of employed women aged 16 to 64 years rose to 21% in the July 2014 to June 2016 period, from 16% during the same period two years earlier.