Wealth and Assets in Scotland, 2006–2014
Analysis of the ownership of wealth by private households in Scotland from the Wealth and Assets 2006–2014 survey.
2 Household Wealth in Scotland
This chapter provides information on the value of total net wealth of private households in Scotland, and the relative contribution of the four components - financial, pension, property and physical wealth.
2.1 Net household wealth in Scotland
In 2012/14, total net wealth of private households in Scotland was £865.6 billion, an increase of 22.2% compared to 2010/12. Tables 2.1 and 2.2 below present the value of net household wealth and its components, and the change in value over time.
All components of wealth increased in 2012/14 compared to 2010/12, but the substantial increase in total household wealth was mainly due to the increase in the value of private pension wealth:
- Financial wealth increased by 13.4% to £99.3 billion, due to an increase in the value of financial assets and a decrease in financial liabilities.
- Private pension wealth increased by 39.1% to £418.6 billion, largely due to changes in the annuity and discount values used to value pension wealth.
- Property wealth increased by 6.1% to £238.3 billion, driven mainly by an increase in the value of the main residence (valued by property owners in current prices) rather than by a substantial increase in the number of properties owned. This was the first rise in the value of net property wealth since 2006/08.
- Physical wealth increased by 14.7% to £109.3 billion. This was due to increases in the perceived replacement value of household goods, rather than any significant increase in the number of goods owned.
Table 2.1 Breakdown of total net household wealth, by components 2006/08 - 2012/14 (£ Billion)
| 2006/08 | 2008/10 | 2010/12 | 2012/14 | |
|---|---|---|---|---|
| Property wealth (net) | 228.5 | 224.9 | 224.7 | 238.3 |
| Financial wealth (net) | 78.6 | 92.1 | 87.6 | 99.3 |
| Physical wealth (gross) | 84.3 | 89.0 | 95.3 | 109.3 |
| Private pension wealth | 276.3 | 291.5 | 300.9 | 418.6 |
| Total net wealth | 667.7 | 697.6 | 708.5 | 865.6 |
| Total net wealth (excluding private pension wealth) | 391.4 | 406.0 | 407.5 | 446.9 |
Source: Wealth and Assets Survey, ONS
Table 2.2 Changes in total net household wealth, by components 2006/08 - 2012/14
| 2006/08 to 2008/10 |
2008/10 to 2010/12 |
2010/12 to 2012/14 |
|
|---|---|---|---|
| Property wealth (net) | -1.6% | -0.1% | 6.1% |
| Financial wealth (net) | 17.2% | -4.9% | 13.4% |
| Physical wealth (gross) | 5.6% | 7.1% | 14.7% |
| Private pension wealth | 5.5% | 3.2% | 39.1% |
| Total net wealth | 4.5% | 1.6% | 22.2% |
| Total net wealth (excluding private pension wealth) | 3.7% | 0.4% | 9.7% |
Source: Wealth and Assets Survey, ONS
Valuation of private pension wealth
The majority of wealth components are calculated directly from the information given by the respondents to the survey. However, private pension wealth is not.
Household total private pension wealth requires separate valuation of different pension types. Wealth from occupational defined contribution ( DC) pensions is calculated from the reported value of the fund. The valuation of wealth from occupational defined benefit ( DB) pensions is more complicated and is modelled using financial parameters (annuity rates and discount factors) which vary over time.
The large movement in the value of private pension wealth observed in 2012/14 can be largely attributed to changes in these financial parameters used for valuing occupational defined benefit pensions between the periods of July 2010 to June 2012 and July 2012 to June 2014.
The financial parameters (annuity rates) used to value DB pensions have generally decreased between the 2010/12 and 2012/14 survey period. The consequence of this is that a fixed DB pension was valued higher on average in 2012/14 than in 2010/12.
See Quality Assurance of private pension membership and wealth for further detail, including sensitivity analysis of the changes in annuity and discount rates.
2.2 Relative contribution of wealth components to total net wealth
This section looks at the contribution of each of the wealth components to total net household wealth, and how these have changed over time. Chart 2.1 shows the relative contribution of each of the wealth components to total net wealth across each survey period.
- Private pension wealth made up 48.4% of all household wealth in 2012-14. The contribution of private pension wealth increased slightly over the first three survey periods, but the substantial increase in 2012-14 meant private pension wealth now makes up nearly half of total household wealth.
- Property wealth made the second largest contribution to total net wealth, accounting for 27.5% in 2012-14. Property wealth as a proportion of total net wealth has been consistently falling over the four survey periods, from a high of 34.2% in 2006-08.
- Physical wealth accounted for 12.6% of total net wealth in 2012-14. The contribution of physical wealth to total net wealth has been relatively stable since 2006-08.
- Financial wealth represented the lowest proportion of total wealth, accounting for 11.5% of total net wealth in 2012-14. The contribution of financial wealth to total net wealth has fluctuated since 2006, but only by 1 or 2 percentage points.
Chart 2.1 Relative contribution of wealth components to household total net wealth 2006/08 - 2012/14
Source: Wealth and Assets Survey, ONS
Contact
Email: Andrew White
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