Press release

Publication of DWP working paper NO. 665: What does the distribution of wealth tell us about future retirement resources?

Analysis of the distribution of wealth in the GB population using data from the first wave of the Wealth and Assets Survey (WAS).

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government


Research published today by the Department for Work and Pensions (DWP) presents analysis of the distribution of wealth in the GB population using data from the first wave of the Wealth and Assets Survey (WAS).

The analysis illustrates what the distribution of different forms of wealth can tell us about future retirement resources. It also looks at the extent to which household wealth is likely to have been exposed to falling asset prices during the recent economic downturn since the time of the WAS fieldwork (2006-2008).

As research has shown that education and lifetime income levels are linked, this paper uses the level of education of the household head as a proxy for the level and profile of lifetime income.

The main findings from this research can be divided into two key themes:

Distribution of wealth

  • Wealth levels are lowest amongst the youngest households and highest amongst households close to retirement, before falling again after state pension age, consistent with the idea of lifecycle saving.
  • On average low education households (headed by someone with no qualifications) aged 25-34 hold over half of their total wealth in liquid safe assets (e.g. savings accounts, ISAs, etc.). However they are the group with the highest proportion of wealth in Defined Contribution (DC) pensions, with almost 10% of their assets in this form.
  • Among the groups of mid-education households (headed by someone educated below degree level), renters and single parents are more likely to have low levels of wealth, while households with multiple earners are more likely to have higher wealth holdings per adult in the household.
  • The highly educated hold on average the highest proportion of their wealth in explicit retirement saving vehicles (DC or DB pensions and pensions in receipt).

Potential impact of the recession

  • The majority of losses because of the recession are caused by losses in housing wealth, particularly amongst low and mid-education households.
  • The size of estimated total losses (in cash terms) increases with education and age as these groups have greater stocks of wealth that are exposed to asset price changes (ranging from £5,400 per adult in mid-education households aged 25 to 34 to an average £24,200 per adult for each highly educated household aged 55 to 64).
  • However when considered as a share of wealth, losses are actually lower among more educated and older households.
  • Those households nearing the end of their working life, for whom losses of wealth will be more important for the resources available in retirement, on average saw losses of 5% to 6% of their gross wealth, and such losses primarily come from house price changes.
  • The average losses of DC pension wealth as a share of total gross wealth from the interview date (2006-08) to 2009 Q3 (the time of this analysis) are fairly negligible for all education level households, as the index for DC funds showed a larger recovery from 2009 Q2.
  • Losses of wealth explicitly labelled as for retirement consumption (such as unannuitised DC pensions funds) are likely to have been fairly insignificant at the time of the analysis except for the small minority of households who hold large shares of their wealth in this form or who annuitised at the bottom of the market.

Notes to editors

  1. DWP Research Working Paper No. 665 “What does the distribution of wealth tell us about future retirement resources?” is published on 15 July 2010.
  2. The research was conducted on behalf of DWP by the Institute for Fiscal Studies. The report authors are James Banks, Rowena Crawford and Gemma Tetlow.
  3. The report is available free on the DWP website:
  4. The research is based on the analysis of the Wealth and Assets Survey (WAS) Wave One dataset. WAS is a large scale nationally representative longitudinal survey of over 30,000 households in GB that provides comprehensive information on peoples’ assets and net wealth. WAS surveys households every two years.
Published 15 July 2010