this is money is at the center of a fresh debate over how wealth is measured in Britain. A report from the Institute for Fiscal Studies says younger adults held a larger share of total household wealth in the 2010s than official statistics suggested, because private pensions were not valued consistently over time. The findings point to a wider gap in data than in the real distribution of wealth across British households.
Private pensions reshape the picture
The IFS said private pensions are the single largest component of UK households’ wealth, but official estimates produced by the Office for National Statistics have undergone significant methodological changes. The report said those changes corrected some longstanding problems, yet were not applied to past years in a way that allows direct comparison, and also introduced new issues.
Using a new measure of private pension wealth calculated coherently and consistently over time, the IFS found pensions made up 54 per cent of total household wealth between 2020 and 2022. Official statistics put the figure at 38 per cent. On that basis, this is money in pension wealth was being understated, especially for people further from retirement during a period of low interest rates.
Younger adults held more wealth than official data showed
The report found the share of household wealth held by people aged 20 to 39 rose significantly over the 2010s, from 10 per cent between 2010 and 2012 to 18 per cent between 2020 and 2022. Official statistics suggested that share was flat at 8 per cent across the same period.
“In other words, the gap in wealth between old and young has been overstated by official statistics since 2010, ” the report said. That means this is money was spread differently than the headline figures implied, with younger adults holding a larger slice of total wealth.
What the IFS and ONS said
IFS senior research economist Laurence O’Brien said: “Good policy starts with good data. Methodological changes and inconsistencies have made it difficult to get a clear picture of wealth inequality in Britain, and how this has changed over time. ” He said addressing the problems shows the top 10 per cent have seen their share fall by more than official estimates indicate, while gaps between educational groups were wider too.
An ONS spokesperson said its latest pension figures use methods from an independent review commissioned from the Government Actuary’s Department. The spokesperson added that the latest data use improved methods, but comparisons over time cannot currently be drawn.
Broader context and what comes next
The report also found the share of total household wealth held by the top 10 per cent fell from 45 per cent between 2006 and 2008 to 42 per cent in 2018 and 2020. By contrast, official estimates suggested only a marginal decline from 46 per cent to 45 per cent. The IFS also said people with degrees were more likely to hold private pension wealth that had been understated by the official approach.
For now, the key issue is not only how much wealth households hold, but how pension wealth is measured. As this is money continues to shape the picture, future releases will be watched closely to see whether newer methods narrow the gap between official estimates and revised analysis.
