Wealth and Assets in Scotland, 2006–2014

Executive Summary

This report presents analysis of the ownership of wealth by private households in Scotland from the Wealth and Assets Survey 2006 - 2014, with a focus on wave 4 of the survey covering the period July 2012 - June 2014. This report updates the Wealth and Assets in Scotland 2006-2012, which was published in March 2015.

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:

The value of total wealth continued to increase in Scotland

• Total net wealth of private households in Scotland was £865.6 billion in 2012/14, an increase of 22.2% compared to 2010/12. The rate of increase was higher than for any previous period.
• All components of wealth increased in value, although the large increase in value was driven by an increase in the value of private pensions.
• Pension wealth continues to be the largest component of wealth. In 2012/14, 48% of all net private wealth was private pension wealth.

Inequality in the distribution of household wealth increased in 2012/14

• The wealthiest 10% of households owned 43% of all private net wealth - worth £374 billion.
• In contrast, the least wealthy 50% of households owned 9% of all private wealth - worth £76.9 billion.
• The wealthiest 1% alone owned more wealth than the bottom 50%.
• The wealthiest 10% owned 67% of financial wealth; 54% of private pension wealth; 43% of property wealth; and 34% of physical wealth.
• In contrast, the least wealthy half of households owned less than 2% of financial wealth; 2% of private pension wealth; 5% of property wealth; and 18% of physical wealth.
• In 2012/14 wealth inequality increased in Scotland. The wealthiest 10% owned 9.4 times more household wealth than the bottom 40%. This is an increase from 8.8 in 2010/12.
• Inequality in the ownership of household wealth in Scotland was slightly lower than that for Great Britain in 2012/14. However, wealth inequality in Scotland and Great Britain remains high, with little difference in the pattern of inequality in Scotland compared to Great Britain.

Financial wealth remains the most unequally distributed component of wealth

• Following the recession, ownership of financial wealth has become more concentrated, while inequality in private pension wealth has decreased (but remains high).
• The wealthiest 10% of households owned two thirds of net financial wealth in 2012/14 worth £68.4 billion - 32.8 times more than the least wealthy 50% of households, and two times more net financial wealth than all other deciles combined.
• In contrast the least wealthy 50% of households owned less than 2% of net financial wealth, worth £2.1 billion.
• Private pension wealth, which made up nearly half of all private wealth, was also highly unequal. The wealthiest 10% of households owned over half of all private pension wealth, worth £227 billion - 22.6 times more private pension wealth than the least wealthy 50% of households.
• The least wealthy half of households owned just over 2% of private pension wealth, worth £10 billion.
• The wealthiest 10% owned nearly 43% of private property wealth, worth £102 billion - 7.9 times more than the bottom 50% of households.

The least wealthy 30% of households have very few assets, with employment no longer a guarantee against low wealth

• The least wealthy 30% of households owned very little or no financial, private pension, or property wealth, and less than 7% of physical wealth in 2012/14.
• Single adult households, including single parent households, had very high risks of low wealth. Nearly two thirds of single parent households and over half of single working age households were low wealth households in 2012/14. These two groups also had the highest risks of poverty.
• Nearly half of low wealth households were in employment. However, households with lower educational qualifications and in routine or manual occupations had significantly higher risks of low wealth.
• The ability to increase wealth, for the lowest wealth households, has worsened in 2012/14. In the latest period, nearly 60% of households remained in the same wealth decile. For the least wealthy households, insufficient income can mean a lifetime of low wealth, despite being in employment.
• With the exception of a current account, the least wealthy had very few financial assets, and ownership by the least wealthy decreased in 2012/14.
• The least wealthy households owned £500 in financial assets in 2012/14, less than a tenth of the median value of financial assets owned by the population as a whole.
• The value of financial assets owned by the least wealthy households has not changed, at around £500, since 2006/08. For the whole population, there was a small increase from £5,170 to £5,600, while the median value for the wealthiest 10% increased from £80,500 to £103,416.
• Household borrowing continued to decrease for the least wealthy households. However, more than one in ten of the least wealthy households had arrears on household bills in 2012/14.

As expected, the wealthiest households are those close to retirement or newly retired

• Wealth accumulation occurs over a lifetime. Pensioner couples and those aged 55 years and older tend to have the greatest wealth.
• The wealthiest households were more likely to own their home outright; have a degree level or above qualifications; and be, or have been, in managerial and professional occupations.

The ability to increase wealth, for the lowest wealth households, has worsened in 2012/14

• Households with very few resources do not have the financial capacity to build wealth. Nearly 60% of households with the lowest wealth, who have little or no wealth, remained in the lowest wealth decile in 2012/14.
• This continues the slowing down in the movement in wealth deciles seen in 2010/12.