Wealth and Assets in Scotland 2006 - 2012

Executive Summary

This report presents analysis of Scottish data from the Wealth and Assets Survey 2006-2012, with a particular focus on findings from the third wave of the survey, covering the period 2010/12. This updates the report Wealth and Assets in Scotland 2006-10, which was published in May 2014.

The Wealth and Assets Survey (WAS) is a key source of information on the economic situation of households in Great Britain. The survey focuses on household assets and debts, borrowing and saving, and plans for retirement.

Key findings from this report are as follows:

Aggregate total wealth increased in Scotland in 2010/12

• Aggregate total wealth of private households increased to £714 billion in Scotland in 2010/12. However, the rate of increase - 2.4 per cent since 2008/10 - was lower than that between 2006/08 and 2008/10.
• This change was driven by increases in pension and physical wealth, which rose consistently between 2006/08 and 2010/12. Property wealth also increased in 2010/12, although it remained at a lower value than in 2006/08. Financial wealth decreased in 2010/12, although it remained higher than in 2006/08.
• Pension wealth was the largest component of wealth in Scotland in 2010/12 at 42 per cent of total wealth. This was followed by property wealth, which accounted for 32 per cent. Physical and financial wealth made up 14 per cent and 12 per cent respectively.

The distribution of household wealth in Scotland remained highly unequal

• The wealthiest 10 per cent of households owned 44 per cent of all wealth in 2010/12. The wealthiest 2 per cent of households alone owned 17 per cent of all personal wealth.
• In contrast, the least wealthy half of households in Scotland owned 9 per cent of total wealth in 2010/12.
• The least wealthy 30 per cent of households owned around 2 per cent of household wealth.
• The wealthiest 10 per cent of households owned 74 per cent of financial wealth, 55 per cent of pension wealth, 43 per cent of property wealth and 33 per cent of physical wealth.
• In comparison, the least wealthy half of households owned less than 1 per cent of financial wealth, less than 3 per cent of pension wealth, 6 per cent of property wealth, and 20 per cent of physical wealth.
• There was a slight reduction in inequality of aggregate total wealth in Scotland between 2006/08 and 2010/12, driven mainly by a fall in the value of pension wealth owned by the wealthiest households, rather than increases in ownership by the least wealthy households. Inequality in physical wealth also decreased, with increases in the value of physical wealth owned by all wealth deciles.

Of the four main components of wealth, financial wealth was the most unequally distributed

• The wealthiest 10 per cent of households owned almost three quarters of all financial wealth in 2010/12. In contrast, the least wealthy 30 per cent had no financial wealth.
• Pension wealth was also unequally distributed, with the wealthiest 10 per cent owning 55 per cent of all private pension wealth, while the least wealthy 30 per cent owned no pension wealth.
• Physical wealth was the most equally distributed wealth component, although the wealthiest 10 per cent still owned a third of physical wealth.

Household wealth was much more unequally distributed than household income

In 2011/12, the top 10 per cent of households in the income distribution earned 1.8 times more income than the bottom 30 per cent. For comparison, in 2010/12, the wealthiest 10 per cent of households had 20.8 times more wealth than the least wealthy 30 per cent.

The least wealthy 30 per cent of households have very few financial assets

• With the exception of money in current accounts, the majority of the least wealthy households had very few financial assets. However, the percentage of the least wealthy group who had current accounts in credit increased from 69 per cent in 2006/08 to 79 per cent in 2010/12.
• For those in the least wealthy households who did have financial assets, the value of those assets was substantially lower than the population as a whole. The median value of all financial assets of people in the least wealthy group was just £500, less than a tenth of the median value for the population as a whole at £5100.

The least wealthy were more likely to be single adult and lone parent households

The least wealthy three deciles were disproportionately made up of single adult and lone parent households. The risk of low wealth was particularly high for lone parents, with two thirds (67 per cent) of all lone parent households in Scotland in the least wealthy three deciles. Younger households were also overrepresented in the least wealthy group.

Employment does not necessarily protect people against low wealth

Almost half of the least wealthy households were headed by someone in employment.