Total wealth across Britain – including private pensions, net property, net financial and physical wealth – continued to rise in the wake of the financial crisis, from £9.9 trillion in 2006 to 2008 to £11.1 trillion in 2012 to 2014, according to Resolution Foundation.
According to Resolution Foundation this increase has been driven by rising pension wealth, in particular final salary pensions which have got more valuable as annuity markets have tumbled.
Private pensions account for the largest share of Britain’s total wealth at 40 per cent of total wealth (or £4.5 trillion), followed by net property wealth (35 per cent or £3.9 trillion) and net financial wealth (14 per cent of £1.6 trillion).
However, despite Britain as a whole getting wealthier, the wealth of a typical adult has fallen since the financial crisis, from £99,000 in 2006 to 2008 to £84,000 in 2012 to 2014.
This fall has driven by falling home ownership and the fall in house prices that followed the crisis and which have still not fully recovered in many parts of the UK, according to a new report by the Resolution Foundation.
The report also showed that the nation’s record £11.1 trillion of wealth is distributed far less equally than earnings or household income.
It finds that one in 10 adults own around half of the nation’s wealth, while the top 1 per cent own 14 per cent of Britain’s wealth.
By contrast, 15 per cent of adults have no or negative wealth.
However, contrary to the popular perception that wealth inequality has been rising for decades, the inequality of net financial and property wealth fell steadily between 1995 and 2005.
This fall in inequality was driven by high and rising home ownership, which meant that more households further down the wealth distribution gained a key asset and were able to benefit from the pre-crisis property price boom.
The proportion of property wealth owned by the bottom four-fifths of adults grew from 35 per cent in 1995 to 40 per cent in 2005.
However, the foundation warns that with home ownership steadily falling since its mid-2000s peak, the proportion of property wealth owned by the bottom four-fifths of the population has started to fall again.
Conor D’Arcy, policy analyst at the Resolution Foundation, said: “The accumulation of wealth over the course of our lives is arguably the most important driver of lifetime living standards, and yet it has been largely ignored in the public debate.
"Given the hugely unequal distribution of wealth across Britain, it’s time we looked into how the nation’s wealth is divided up and what the consequences are for those who never build up assets of any significance.
“While many people assume we live in a country of ever growing wealth inequality, in fact Britain witnessed a significant closing of the wealth gap between rich and poor in the decade or so before the crisis.
"This is largely due to rising home ownership which enabled many less wealthy families to gain a key asset and benefit from rising property prices.
“However with wealth inequality now rising again, the progress of the pre-crisis period has gone into reverse."
Chris Daems, director of Cervello Financial Planning, said: "I'm not convinced that the wealth gap is a measure of significance, apart from those who want to make the conversation a political (as opposed to a practical one.
"However, I agree that in one of the largest economies of the world we should change policies to make sure that those of us with the least have the opportunity to accumulate wealth."
Tom McPhail, head of policy at Hargreaves Lansdown, said: "As a nation, we all need to become better at saving and investing for our future, as this presents the most effective mechanism for increasing wealth.
"If policymakers want to redress wealth inequalities, they should look at inheritance tax and social care costs, both of which are politically toxic."
Tom Selby, senior policy analyst at AJ Bell, said: "People often forget that a pension will likely be the largest financial asset they will own throughout their lifetime, with property usually the only exception.
"Despite this, many people still aren't setting enough aside to cover their needs in old age and more needs to be done to boost retirement saving in the UK.
"The Resolution Foundation is absolutely right that pensions need to be accessible to as many people as possible, which might be one of the reasons the new pensions minister has a specific remit to cover 'financial inclusion'."
stephanie.hawthorne@ft.com
