Wealth and Assets in Scotland, 2006–2014

8 The Wealthiest Households in Scotland

This chapter looks at the socio-demographic characteristics of the wealthiest 10% of households ^[30] , referred to as the "wealthiest households". Wealth is a cumulative process, built up over a lifetime, therefore those close to or at retirement age are likely to have greater wealth.

8.1 The share of wealth of the wealthiest households

Ownership of wealth is concentrated within the top 10% of households in Scotland. In 2012/14, the wealthiest 10% of households owned 43.2% of total household wealth in Scotland. The wealthiest households owned:

• 66.8% of financial wealth;
• 54.2% of private pension wealth;
• 42.5% of property wealth;
• 34.0% of physical wealth.

8.2 The socio-demographic composition of the wealthiest households

This section provides information on age, household type, employment status, education, socio-economic group and tenure of the wealthiest households in Scotland.

8.2.1 Age

Nearly all of the wealthiest households had a head of household aged 45 and older, and more than three quarters of the wealthiest households were headed by someone aged 55 and older. This reflects the fact that wealth is accumulated over a life course. Chart 8.1 below shows the age group of the head of household of the wealthiest group compared to the whole population and the least wealthy households.

Chart 8.1 Age of head of household, wealthiest 10%, least wealthy 30% and whole population, 2012/14

Source: Wealth and Assets Survey, ONS

8.2.2 Household type

As expected, pensioner couples were over represented in the wealthiest households - reflecting their life stage. Chart 8.2 below shows the household type of the wealthiest households compared with the whole population and the least wealthy households.

Chart 8.2 Household composition, wealthiest 10%, whole population and least wealthy 30%, 2012/14

Source: Wealth and Assets Survey, ONS

Couples without children, and couples with non-dependent children, were over represented in the wealthiest households, but less so than pensioner couples, reflecting sufficient income to build up assets, but having less time to date to do so.

8.2.3 Employment status

Chart 8.3 below shows the most recent employment status of the head of household for the wealthiest households. Nearly half of the wealthiest households were those where the head of household was in employment, the same as for the least wealthy households. However, retired households were more likely to be in the wealthiest group, reflecting the life stage where wealth accumulation tends to be greatest.

Chart 8.3 Employment status of head of household, wealthiest 10%, least wealthy 30% and whole population, 2012/14

Source: Wealth and Assets Survey, ONS

8.2.4 Educational qualifications

Households where the head has a higher level of education were more likely to be in the wealthiest group. Chart 8.4 below shows heads of the wealthiest households were more likely to be educated to degree level or above. Over half of the wealthiest households were headed by a person with university level qualifications, and nearly all had some form of educational qualifications ^[31] .

Chart 8.4 Education of head of household, wealthiest 10%, least wealthy 30% and whole population, 2012/14

Source: Wealth and Assets Survey, ONS

8.2.5 Socio-economic group

Households headed by someone in a higher socioeconomic group were significantly more likely to be in the wealthiest group. Chart 8.5 below shows the socio-economic group of the head of household for the wealthiest, the least wealthy and the whole population. Heads of the wealthiest households were, or had been, predominantly in managerial and professional occupations.

Chart 8.5 Socio-economic group of the head of household, wealthiest 10%, least wealthy 30% and whole population, 2012/14

Source: Wealth and Assets Survey, ONS

8.2.6 Tenure

Nearly all (98%) of the wealthiest households are owner occupiers - with three quarters owning their home outright. In contrast the least wealthy were predominantly in rented accommodation. Chart 8.6 below shows the tenure of the main residence of the wealthiest households compared with the least wealthy and the whole population.

Chart 8.6 Tenure of main residence, wealthiest 10%, least wealthy 30% and whole population, 2012/14

Source: Wealth and Assets Survey, ONS

Chart 8.7 below shows the net value ^[32] of the main residence for the wealthiest, the least wealthy and the whole population. It is important to note this is a net valuation - the value of the property less any outstanding debt (such as a mortgage) or equity release on the property. The wealthiest households, as expected, own higher value properties. Part of the higher value reflects the high rate of owning outright, with no outstanding mortgage, as this is a net valuation. Similarly part of the lower value of the main residence for the least wealthy group is the outstanding mortgages on the main residence (which will reduce through time, so leading to increases in the net value of the main residence).

The main residence for nearly 60% of the wealthiest households was valued at £250,000 or more, compared with 20% for the whole population. In contrast, the main residence had a net value of less than £100,000 for 64% of the least wealthy households.

Chart 8.7 Value of main residence, wealthiest 10%, least wealthy 30% and whole population, 2012/14

Source: Wealth and Assets Survey, ONS

The wealthiest households owned more wealth in household contents than the rest of the population (deciles 1-9). Chart 8.8 below shows the value of household contents for the wealthiest households and the whole population in 2012/14. Around half (49%) of the wealthiest households had household contents valued at more than £50,000. By contrast, 55% of the whole population had household contents valued at less than £30,000, and around half (48%) of the least wealthy households had contents valued at less than £10,000.

Chart 8.8 Value of household contents, wealthiest 10%, least wealthy 30% and whole population, 2012/14

Source: Wealth and Assets Survey, ONS

8.3 Financial assets of the wealthiest households

This section looks at the ownership of financial assets (both formal and informal) and the value of those assets, by the wealthiest households compared to the whole population. Financial wealth comprises: formal financial assets (such as bank accounts, savings accounts, stocks and shares); informal financial assets (such as money saved at home); and liabilities (such as formal borrowing, overdrafts and arrears on household bills).

8.3.1 Ownership of financial assets

The wealthiest households were significantly more likely to own financial assets than the whole population. Chart 8.9 below shows the proportion of the wealthiest households who owned financial assets in 2012/14, compared to the whole population and the least wealthy households.

Chart 8.9 Ownership of formal financial assets, wealthiest 10%, least wealthy 30% and whole population, 2012/14

Source: Wealth and Assets Survey, ONS

The wealthiest households were more likely to own all types of financial assets than the whole population - even for those assets that are thought of as common place, such as current accounts and savings accounts. In comparison, the least wealthy households were only likely to own current accounts, savings accounts and ISAs.

The wealthiest households were:

• nearly twice as likely to have a savings account (81%, compared to 45% of the whole population and 20% of the least wealthy households), or an ISA (77%, compared to 40% of the whole population and 14% of the least wealthy households)
• three times as likely to own national savings products or shares;
• four times more likely to own fixed term bonds, investment trusts or gilts and bonds.

8.3.2 Change in ownership of financial assets over time

Chart 8.10 shows the rates of ownership by the wealthiest households of financial assets. The rate of ownership of nearly all types of financial assets increased between 2006/08 and 2008/10. Since then, rates of ownership of all types of financial assets except a current account in credit have decreased for all groups. However, the prevalence of ownership of financial assets by the wealthiest households remains significantly higher than for the whole population or the least wealthy group.

Chart 8.10 Ownership of formal financial assets over time, wealthiest 10%, 2006/08 - 2012/14

Source: Wealth and Assets Survey, ONS

8.3.3 Value of financial assets

In 2012/14, the median value of financial assets owned by the wealthiest households was around 18 times that owned by the whole population, and more than 200 times higher than the median value of financial assets owned by the least wealthy households.

Chart 8.11 below shows the median value of financial assets owned by the wealthiest group was £103,416 in 2012/14 - compared with £5,600 for the whole population and £500 for the least wealthy households.

Chart 8.11 Median value of formal financial assets, wealthiest 10%, least wealthy 30% and whole population, 2012/14

Source: Wealth and Assets Survey, ONS

Chart 8.12 below shows the median value of financial assets between 2006/08 and 2012/14. Following a decrease in 2010/12, the median value of financial assets owned by the wealthiest households increased by 32% between 2010/12 and 2012/14. In contrast, the median value of financial assets increased by 8% across the whole population and by 0% for the least wealthy.

Chart 8.12 Median value of formal financial assets, wealthiest 10%, least wealthy 30% and whole population 2006/08 - 2012/14

Source: Wealth and Assets Survey, ONS

The total value of financial assets owned by all groups increased between 2006/08 and 2008/10. Between 2008/10 and 2012/14, the total value of financial assets owned by the wealthiest households increased by 23%, for the whole population by 21%, but decreased by 31% for the least wealthy households.

8.4 Non-mortgage borrowing

This section looks at the prevalence of household borrowing, excluding mortgage borrowing. Non-mortgage borrowing includes credit card debt, student loans, overdrafts, store card and mail order debt, hire purchase debt and arrears on household bills.

8.4.1 The prevalence of borrowing

The wealthiest households, as expected, have a lower prevalence of non-mortgage borrowing than the whole population. In 2012/14, 29% of the wealthiest households had borrowing, compared with 36% of the whole population and the least wealthy households. Chart 8.13 below shows the prevalence on all types of non-mortgage borrowing, with the exception of hire purchase, is lower for the wealthiest group compared to the whole population.

While the wealthiest households were unlikely to have arrears on household bills, as expected, nearly one in 20 households across the whole population and more than one in ten of the least wealthy households had arrears on household bills.

Chart 8.13 Percentage of households with non-mortgage borrowing, wealthiest 10%, least wealthy 30% and whole population, 2012/14

Source: Wealth and Assets Survey, ONS

8.4.2 Change in borrowing over time

Chart 8.14 below shows the percentage of the wealthiest households with non-mortgage borrowing across the survey periods. The prevalence of household borrowing for the wealthiest households was largely unchanged in 2012/14, but remains below the 2006/08 levels. Across the whole population (middle set of columns in the chart) the prevalence of borrowing was unchanged until 2012/14, when there was a decrease. The prevalence of borrowing by the wealthiest households remains lower than that for the whole population, and the least wealthy households.

Chart 8.14 Percentage of households with non-mortgage borrowing, wealthiest 10%, least wealthy 30%, and whole population 2012/14

Source: Wealth and Assets Survey, ONS

8.4.3 The value of borrowing

While the wealthiest households were less likely to borrow, those that did had higher value borrowing than the whole population. The wealthiest households had a median value of £5,000 in non-mortgage borrowing, compared to £3,550 for the whole population.

Chart 8.15 below shows the median value of borrowing by the wealthiest households was the same as or higher than the whole population for nearly all types of borrowing. As expected, the least wealthy households had lower median value of borrowing than for the whole population across all types of borrowing with the exception of mail order debt.

Chart 8.15 Median value of non-mortgage borrowing, wealthiest 10%, least wealthy 30% and whole population, 2012/14

Source: Wealth and Assets Survey, ONS

8.4.4 Change in the value of borrowing over time

Chart 8.16 shows that over the whole period, the median value of borrowings for the wealthiest households has increased by 30% to £5,000 and for the whole population by 64% to £3,550. However, for the least wealthy households the median value of household borrowing in 2012/14, at £1,200 is the same as is 2006/08.

Chart 8.16 Median value of non-mortgage borrowing, wealthiest households, whole population, and least wealthy households

Source: Wealth and Assets Survey, ONS