Average pension wealth for UK households increased by 20 per cent in the past two years, according to the Office for National Statistics, but an increase in aggregate debt clouded good news for overall financial health.
The ONS Wealth in Great Britain survey showed aggregate retirement savings rose to £4.57tn for the period from 2014 to 2016 from £3.91tn between July 2012 and June 2014.
Total wealth jumped 15 per cent to £12.8tn over the same period, although the statistics agency noted that more than a third of the change in pensions values was due to market factors. Private pension wealth continues to account for the largest share of total household wealth in the UK.
Amid broadly flat inequality levels in wider society, pensions inequality as measured by the Gini coefficient has decreased steadily in recent years, the survey found.
Private pension wealth inequality was 0.72 for 2014-16, down from 0.77 for 2006-08. A Gini coefficient of one denotes maximum inequality, while a Gini coefficient of zero indicates no inequality.
Total household debt also increased, moving to £1.2tn for 2014-16. The increase of 15 per cent mirrored the increase in total wealth.
"On the surface, these figures look encouraging, but dig a little deeper and some alarming trends emerge," said Rachael Griffin, financial planning expert at Old Mutual Wealth.
She said the debt figures suggest "behaviours and attitudes haven’t really changed as a result of the financial crisis, and instead of setting more money aside in the good years, we are relaxing into a familiar pattern of debt accumulation".
She added: "Although there is something of a success story in pensions, we must not be naive about the fact there is still a substantial gap between the ‘haves’ and the ‘have nots’ of retirement savings, and the perennial problem of too many people reaching retirement age with an inadequate pension pot has not gone away.”
