Campaigners have sounded the alarm about a potential increase in pensioner poverty in Britain over the coming decades after it emerged that the share of wealth held by people under 40 has fallen sharply amid a growing intergenerational divide.
Data from the International Longevity Centre (ILC) thinktank shows that in 2010-11, under-40s made up just over half of the population and between them held £7.53 of every £100 in wealth.
While that figure was low, a decade later it had plummeted to £3.98. Over the same period, the proportion of under-40s fell from 50.6% to 49.5%.
Those under-40s have already been identified as facing the biggest hit from rising mortgage rates, and last week a study by the financial advice firm Hargreaves Lansdown found that almost a third of 18- to 34-year-olds had stopped or cut back on their pension contributions in order to save money.
The ILC data is based on analysis of figures from the Office for National Statistics, and the wealth being measured includes the value of property, private pensions, savings and investments, and any other valuables.
During the period the figures cover, all age groups had to contend with a squeeze on wages and financial strains caused by the Covid pandemic, but older generations have seen their wealth grow.
Property ownership is the key driver for the gap, with under-40s more likely to be renting for longer than previously or owning homes that have not gone up in value as much as larger properties.
The mean net property wealth in this group fell from £13,967 in 2010 to £11,450 in 2019 (although the median was £0 in both years), while in the 40-64 and 65-plus groups there were large rises.
The older groups also recorded sizeable increases in pension wealth. The figures suggest a growing threat of pensioner poverty if current trends continue.
David Sinclair, the chief executive of the International Longevity Centre UK, said: “Younger people are already not saving enough to enjoy a decent lifestyle as they age, and our latest analysis shows that younger generations will have even fewer assets available.
“Pensioner poverty is already a significant issue, and it will grow if we don’t act now. We know that future retirees won’t be able to rely on housing wealth and many will need to spend money on rent into retirement.
“It is crucial that we address these challenges head-on and develop comprehensive strategies to ensure that every generation has the support they need to be financially secure right across their lives.”
The research also looked at the strains on finances that people older than 40 could face in the future. The ILC said the number of private renters aged 65 and over was projected to double by 2046, to reach 12% of households in that demographic.
Renting a property will mean a strain on incomes that those who own a home outright will not face.
The ILC’s research into longevity is being backed by the insurer Aviva. Doug Brown, the chief executive of Aviva UK & Ireland Life, said: “Financial pressures are growing and affecting all generations; however, the youngest workers are in a particularly vulnerable position when it comes to saving for their retirement. With lower overall wealth today than the equivalent generation had a decade ago, this is concerning.”
