The value of household savings – including deposits, pensions and shares – has grown more than 452 per cent in real terms over the past 40 years, according to Lloyds Bank.
This is equivalent to an average annual rate of growth of 4.4 per cent and puts UK household savings at an estimated £4,100bn, compared to £744bn in 1975, in today’s prices.
The average value of savings per household has increased 294 per cent from £36,989 in 1975 to £145,566 today.
With the number of households growing by 40 per cent over the period, Lloyds noted that the increase is not as dramatic as the overall rise in the value of household savings, however there are considerable differences in the value of savings with some UK households holding little or no savings.
Over one in three (36 per cent) UK households have no savings (deposits and investments) and a further 13 per cent hold savings and investments of less than £1,500 in value.
Household savings held in the form of pensions have grown almost sixteen fold from £123bn in 1975 to £1,944bn today. Pensions accounted for over half (54 per cent) of the overall increase in households savings over the period.
Over the past 40 years, the annual growth rate has been on average 7 per cent – faster than for any other form of savings – with the importance of private pensions growing sharply over the period, rising to 47 per cent of total household savings this year, from 17 per cent in 1975 to 37 per cent a decade later.
Over the twenty-five year period to 1999 the value of shares held by households grew sharply, rising by over 482 per cent.
However, in 2015 the value of shares held by households was 32 per cent below the 40 year peak achieved in 1999 when prices in dot.com shares collapsed. Turbulence in the equity markets has contributed to a shrinking in the value of shares as a proportion of total household savings from 35 per cent in 1999 to 19 per cent this year.
The value of deposit-based savings has grown by 226 per cent in real terms since 1975, with the largest growth spurt coming in the two decades to 2005, with a rise of 121 per cent.
Philip Robinson, savings director at Lloyds, said that over the last 40 years the market has seen increased retail competition, the rise of digital banking and a greater emphasis on private pensions and ‘tax free’ savings.
“Despite witnessing three recessions during the period, in addition to rising levels of consumer spending and borrowing, real household savings have grown annually by an average of over 4 per cent and we would expect this to continue over the next few years.”
peter.walker@ft.com
