Personal wealth is one of the key components of people’s standard of living. Wealth can be used as a source of finance to improve current or future living standards, to invest in opportunities such as education or entrepreneurial activities, and to provide financial resilience, reducing vulnerability to shocks such as unemployment or illness. Many people will try to grow their wealth throughout their working lives, in preparation for retirement, but households with low income and low starting wealth will find this more difficult. This reports sets out the current state of wealth and wealth inequality in Scotland and how this has changed over recent years.

This report is published under the label “Experimental Official Statistics” as it is the first Official Statistics publication on wealth published by the Scottish Government. We invite feedback on the content and presentation of this report in order to improve future releases.

Overview

The Total Wealth section gives an overview over the amount of personal wealth present in Scotland, how wealth is made up of four different components, how the relative importance of each have changed over the years, and how Scotland’s wealth compares to that of England and Wales.

The Wealth Inequality section describes how wealth is distributed across households in Scotland, how that has changed over time, and how it compares to how income is distributed across households. Furthermore, a range of measures describe wealth inequality in Scotland over time, and in comparison to Wales and England. And finally, different types of households are shown that have above or below average wealth.

The Financial Wealth and Debt section describes how financial wealth is distributed across households in Scotland, how financial wealth is more unequally distributed compared to the other components of wealth. A subsection on unmanageable debt looks at those households in Scotland at the very bottom end of the financial wealth spectrum, and another subsection on financial vulnerability identifies the kind of households that might struggle in a crisis because they have little savings.

The Property Wealth section shows the distribution of property wealth for those households that have property. It then looks at households with no property wealth whatsoever, and identifies types of households that are more or less likely to have some property wealth.

And finally, the Pension Wealth section shows how pension wealth is distributed for those people and households that have pension wealth. Pension participation is shown by age and gender. And finally, the types of households are identified that are more or less likely to have some pension wealth.

1. Total Wealth

This section gives an overview over the amount of personal wealth present in Scotland, how it is made up of four different types of wealth, how wealth has changed over the years, and how Scotland compares to England and Wales.

People’s personal wealth is made up of their physical, financial, property and pension wealth, with pension wealth the biggest component of them all.

Financial wealth (net financial wealth) is calculated as the sum of all financial assets (such as bank accounts, savings accounts, stocks and shares) minus all liabilities (such as overdrafts, loans, credit card debt, and arrears on household bills). These can be formal assets, such as savings accounts or loans from banks, or informal assets, such as money held at home, or borrowing from friends and family.

Physical wealth (gross physical wealth) is the value of household goods such as appliances, computers, televisions, jewellery, collectables, vehicles, personal number plates, and other valuables. The valuations are derived from respondents’ own estimates of the value of items. Any borrowing to finance such purchases is not included in this estimate (borrowing is included in net financial wealth).

Property wealth (net property wealth) is the value of all property owned (the main residence and any other property owned) less any debt on the property ( e.g. mortgage) and equity release. It is derived from respondents’ own valuations of their properties, rather than any survey valuation.

Pension Wealth is an estimate of the value of wealth held in private (non-state) pension schemes, expressed as an equivalent ‘pot of money’. It comprises occupational and personal pensions and includes pensions of public sector workers. The estimate is based only on the pension rights accumulated to date and does not include rights which may be built up in future.

1.1 Types of wealth

Households in Scotland had just over one trillion pounds (£1,097 billion) in total wealth in 2016-2018. The largest part of total wealth was pension wealth, which made up 53% of all wealth.

An average (median) household in Scotland had £233,400 in total wealth. An average household in England and Wales was slightly wealthier (£294,700 and £253,200), mainly driven by higher property wealth.

Components of wealth

Median wealth

Scotland, England, Wales

Tables

Table 1.1 Amount of total wealth and wealth components in Scotland, 2016-2018
Type Share Amount
Financial wealth 10% £114 billion
Physical wealth 11% £123 billion
Property wealth 25% £275 billion
Pension wealth 53% £585 billion
Total wealth 100% £1,097 billion
a Source: Wealth and Assets Survey
Table 1.2 Median wealth by wealth type and region, 2016-2018
Region Financial Physical Property Pension Total
Scotland £5,500 £39,700 £65,000 £70,200 £233,400
England £7,900 £38,000 £116,000 £67,200 £294,700
Wales £6,000 £35,800 £89,500 £67,400 £253,200
Great Britain £7,400 £38,000 £105,000 £67,600 £286,600
a Source: Wealth and Assets Survey
b In this analysis, the median refers to all households, whether or not they have any wealth.

1.2. Wealth over time

Wealth has been growing over time, and pension wealth has been getting more important compared to other types of wealth in Scotland.

While wealth growth in Scotland and Wales is mainly driven by pension wealth, in England the drivers are pension, property and financial wealth.

In Scotland and Wales, pension wealth is getting more important, and property wealth less important over time and compared to England.

Wealth over time

Scotland, England, Wales

Contribution to total wealth

Tables

Table 1.3 Wealth amounts by region and period
Wealth type 2006-2008 2008-2010 2010-2012 2012-2014 2014-2016 2016-2018
Scotland
Financial £97 billion £108 billion £97 billion £105 billion £102 billion £114 billion
Physical £104 billion £104 billion £105 billion £113 billion £121 billion £123 billion
Property £281 billion £263 billion £247 billion £247 billion £264 billion £275 billion
Pension £340 billion £341 billion £331 billion £437 billion £533 billion £585 billion
Total £821 billion £817 billion £780 billion £902 billion £1,022 billion £1,097 billion
England
Financial £1,136 billion £1,118 billion £1,296 billion £1,486 billion £1,686 billion £1,949 billion
Physical £1,023 billion £1,024 billion £1,028 billion £1,021 billion £1,075 billion £1,130 billion
Property £3,869 billion £3,521 billion £3,484 billion £3,596 billion £4,065 billion £4,645 billion
Pension £2,992 billion £3,493 billion £3,370 billion £3,948 billion £4,565 billion £5,193 billion
Total £9,020 billion £9,157 billion £9,179 billion £10,050 billion £11,392 billion £12,917 billion
Wales
Financial £50 billion £53 billion £47 billion £52 billion £49 billion £62 billion
Physical £55 billion £60 billion £56 billion £53 billion £55 billion £62 billion
Property £200 billion £168 billion £150 billion £154 billion £167 billion £171 billion
Pension £218 billion £212 billion £181 billion £220 billion £265 billion £320 billion
Total £523 billion £493 billion £435 billion £478 billion £536 billion £614 billion
Great Britain
Financial £1,283 billion £1,279 billion £1,440 billion £1,643 billion £1,837 billion £2,124 billion
Physical £1,182 billion £1,188 billion £1,189 billion £1,187 billion £1,252 billion £1,315 billion
Property £4,350 billion £3,953 billion £3,881 billion £3,996 billion £4,497 billion £5,090 billion
Pension £3,550 billion £4,047 billion £3,882 billion £4,605 billion £5,363 billion £6,098 billion
Total £10,364 billion £10,467 billion £10,393 billion £11,430 billion £12,950 billion £14,628 billion
a Source: Wealth and Assets Survey
b Amounts are adjusted for inflation and are in 2016-2018 prices
Table 1.4 Relative contribution of each component to total wealth over time
Wealth type 2006-2008 2008-2010 2010-2012 2012-2014 2014-2016 2016-2018
Scotland
Financial 12% 13% 12% 12% 10% 10%
Physical 13% 13% 13% 13% 12% 11%
Property 34% 32% 32% 27% 26% 25%
Pension 41% 42% 42% 49% 52% 53%
Total 100% 100% 100% 100% 100% 100%
England
Financial 13% 12% 14% 15% 15% 15%
Physical 11% 11% 11% 10% 9% 9%
Property 43% 38% 38% 36% 36% 36%
Pension 33% 38% 37% 39% 40% 40%
Total 100% 100% 100% 100% 100% 100%
Wales
Financial 10% 11% 11% 11% 9% 10%
Physical 11% 12% 13% 11% 10% 10%
Property 38% 34% 35% 32% 31% 28%
Pension 42% 43% 42% 46% 49% 52%
Total 100% 100% 100% 100% 100% 100%
Great Britain
Financial 12% 12% 14% 14% 14% 15%
Physical 11% 11% 11% 10% 10% 9%
Property 42% 38% 37% 35% 35% 35%
Pension 34% 39% 37% 40% 41% 42%
Total 100% 100% 100% 100% 100% 100%
a Source: Wealth and Assets Survey

2. Wealth Inequality

Wealth inequality in Scotland is monitored within Scotland’s National Performance Framework1. This section shows how wealth is distributed across the population, and how much more the wealthiest households have compared to the least wealthy. Using a range of summary measures, we look at how wealth inequality differs for the four different components of total wealth, how overall wealth inequality has changed over the years, and compare Scotland to England and Wales. And finally, we look at the types of households in Scotland that typically have more or less wealth than the average.

Income and wealth

Discussion on inequality often focuses on how unequally income is distributed, but wealth is even more unequally distributed than income.

The chart below splits Scotland’s population into fifty equal-sized groups, which are sorted by income and wealth on the horizontal axis, with each bar representing 2% of the population. Lower income / less wealthy households are on the left, and richer / wealthier households are on the right. The height of the bars shows each group’s share of total income / wealth.

The 2% top income households in Scotland had 9% of all income, but the wealthiest 2% of all households in Scotland had 15% of all wealth. On the other end, the bottom 20% households had 8% of all income, and only 1% of all wealth.

Income and wealth

Table

Table 2.1 Relative share of total wealth and of total income by 2% band, Scotland 2016-2018
Percentile Wealth share Income share
2 0.0% 0.1%
4 0.0% 0.5%
6 0.0% 0.6%
8 0.0% 0.7%
10 0.1% 0.8%
12 0.1% 0.9%
14 0.1% 0.9%
16 0.1% 1.0%
18 0.1% 1.0%
20 0.2% 1.1%
22 0.2% 1.1%
24 0.2% 1.1%
26 0.3% 1.2%
28 0.3% 1.2%
30 0.4% 1.3%
32 0.4% 1.3%
34 0.5% 1.3%
36 0.5% 1.4%
38 0.6% 1.4%
40 0.6% 1.5%
42 0.7% 1.5%
44 0.7% 1.6%
46 0.8% 1.6%
48 0.9% 1.7%
50 1.0% 1.7%
52 1.0% 1.7%
54 1.1% 1.8%
56 1.2% 1.8%
58 1.3% 1.9%
60 1.5% 1.9%
62 1.5% 1.9%
64 1.6% 2.1%
66 1.8% 2.1%
68 1.9% 2.1%
70 2.1% 2.2%
72 2.2% 2.3%
74 2.5% 2.3%
76 2.5% 2.4%
78 2.7% 2.5%
80 3.0% 2.6%
82 3.3% 2.7%
84 3.8% 2.8%
86 4.0% 2.9%
88 4.1% 3.0%
90 5.1% 3.2%
92 5.3% 3.4%
94 6.2% 3.6%
96 7.0% 4.0%
98 9.0% 4.9%
100 15.4% 9.3%
All 100.0% 100.0%
a Source: Wealth and Assets Survey, Family Resources Survey
b Income is disposable net household income and based on the financial years 2016/17 and 2017/18.
c Negative values of total wealth were set to 0 when producing this table.

2.1 Wealth distribution

The wealth distribution chart below splits all households in Scotland into ten equal-sized groups (called deciles), sorted by household wealth, from the least wealthy on the left, to the wealthiest on the right. The chart shows the wealth of a typical household in each decile group, or the decile medians.

A typical household in the top decile of the household population had £1.6 million, whereas a typical household in the bottom decile had £7,500 in total wealth.

Note that the least wealthy households are unlikely to own property or have any pension savings. Most of their wealth is also not cash or savings, but rather physical wealth, the value of people’s possessions such as clothing or furniture.

Median wealth

Table

Table 2.2 Median total wealth by wealth decile, Scotland 2016-2018
Wealth decile Median wealth
1 £7,500
2 £28,400
3 £62,100
4 £115,900
5 £185,900
6 £285,600
7 £414,700
8 £604,000
9 £922,700
10 £1,640,600
All £233,400
a Source: Wealth and Assets Survey

2.2 Wealth inequality by wealth type

While wealth distributions like the one above give a detailed picture of inequality at one point in time, summary measures of wealth inequality can track change over time and compare different regions, or compare inequality for different types of wealth. The following sections include a range of summary measures, which describe slightly different shades of inequality.

The table below shows how the extent of inequality differs for the four different components of wealth. For all of these measures, a larger value corresponds to a higher level of inequality.

Financial wealth is the most unequally distributed type of wealth. It has the highest Gini coefficient among all types of wealth. The mean-to-median ratio, which shows how skewed the wealth distribution is towards higher wealth, is largest for financial wealth. And the share of wealth that is held by the 10% wealthiest households is also largest for financial wealth.

Table 2.3 Wealth inequality measures by type of wealth, Scotland 2016-2018
Wealth type Gini Mean-to-median ratio Share of top 10% No wealth
Financial 88 8.73 71% 24%
Physical 45 1.31 33% 0%
Property 66 1.78 45% 34%
Pension 71 3.51 50% 18%
Total 62 1.98 43% 1%
a Source: Wealth and Assets Survey
b Gini: Gini coefficient of wealth inequality
c No wealth: The proportion of households with no (or negative) wealth

2.3 Wealth inequality over time

Based on most (but not all) summary measures, wealth inequality in Scotland has been either largely stable or fluctuating without a clear trend since 2010-2012. The only exception was the absolute (inflation-adjusted) wealth gap between the wealthiest 10% and the least wealthy 40%, which has widened, showing an increase in inequality. This suggests that relative wealth inequality is largely stable, but because wealth is growing, the absolute gap between the wealthiest and the least wealthy is increasing.

Previously, between 2006-2008 (when measurement started) and 2010-2012, wealth inequality had decreased, or in case of the absolute wealth gap, stalled. It appears that this previous decrease happened because what wealth share the 10% wealthiest households lost, medium-wealth households gained, with little change for the least wealthy.


Note that small differences in these estimates may not be meaningful and should be interpreted with care. This is because the estimates are based on a sample survey and could be slightly higher or lower if we interviewed a different sample of the population.

Gini

Palma

Mean-to-median

Wealth shares

No wealth

Wealth gap

Table

Table 2.4 Wealth inequality measures, Scotland
Share of…
Period Gini Palma Mean-to-median ratio bottom 40% mid 50% top 10% Wealth gap No wealth
2016-2018 62 9 1.98 5% 52% 43% £1,596,000 1%
2014-2016 60 8 1.77 5% 54% 41% £1,455,900 1%
2012-2014 62 10 1.99 4% 52% 44% £1,404,300 1%
2010-2012 61 9 1.91 5% 52% 43% £1,153,600 1%
2008-2010 63 10 1.95 5% 49% 46% £1,159,300 2%
2006-2008 65 12 2.03 4% 47% 49% £1,170,400 5%
a Source: Wealth and Assets Survey
b Gini: Gini coefficient of total wealth inequality
c Palma: Palma ratio - the ratio of total wealth of the top 10% and the bottom 40%
d Wealth gap: The difference in median wealth of the top 10% and the bottom 40% (also called ‘absolute Palma ratio’), inflation-adjusted
e No wealth: The proportion of households with no (or negative) wealth

2.4 Scotland, Wales and England

In the charts below, we compare Scotland with England and Wales. Overall wealth inequality is broadly similar in Scotland, Wales and England, with Wales only slightly less unequal than Scotland and England on most measures.


Note that small differences in these estimates may not be meaningful and should be interpreted with care. This is because the estimates are based on a sample survey and could be slightly higher or lower if we interviewed a different sample of the population.

Gini

Palma

Mean-to-median

Wealth shares

Wealth gap

Table

Table 2.5 Wealth inequality measures, total wealth
Share of…
Period Gini Palma Mean to median ratio bottom 40% mid 50% top 10% Wealth gap No wealth
Scotland
2016-2018 62 9 1.98 5% 52% 43% £1,596,000 1%
2014-2016 60 8 1.77 5% 54% 41% £1,455,900 1%
2012-2014 62 10 1.99 4% 52% 44% £1,404,300 1%
2010-2012 61 9 1.91 5% 52% 43% £1,153,600 1%
2008-2010 63 10 1.95 5% 49% 46% £1,159,300 2%
2006-2008 65 12 2.03 4% 47% 49% £1,170,400 5%
England
2016-2018 63 10 1.97 4% 51% 45% £1,905,800 1%
2014-2016 63 10 1.95 4% 51% 45% £1,716,700 2%
2012-2014 63 10 1.95 4% 51% 45% £1,553,300 1%
2010-2012 61 9 1.81 5% 51% 44% £1,404,800 2%
2008-2010 61 8 1.76 5% 51% 43% £1,386,000 1%
2006-2008 61 9 1.73 5% 52% 43% £1,376,700 6%
Wales
2016-2018 60 9 1.89 5% 55% 40% £1,583,500 1%
2014-2016 61 9 1.83 5% 54% 42% £1,480,100 1%
2012-2014 59 8 1.70 5% 54% 40% £1,290,700 1%
2010-2012 57 6 1.57 6% 54% 39% £1,145,800 1%
2008-2010 59 7 1.63 6% 51% 43% £1,234,800 1%
2006-2008 59 7 1.64 6% 51% 43% £1,162,200 4%
Great Britain
2016-2018 63 10 1.97 4% 51% 45% £1,856,800 1%
2014-2016 63 10 1.94 4% 51% 45% £1,683,600 1%
2012-2014 63 10 1.94 4% 51% 45% £1,528,400 1%
2010-2012 61 9 1.80 5% 51% 44% £1,374,200 1%
2008-2010 61 8 1.77 5% 51% 44% £1,362,100 1%
2006-2008 61 9 1.75 5% 51% 44% £1,345,800 5%
a Source: Wealth and Assets Survey
b Gini: Gini coefficient of total wealth inequality
c Palma: Palma ratio - the ratio of total wealth of the top 10% and the bottom 40%
d Wealth gap: The difference in median wealth of the top 10% and the bottom 40% (also called ‘absolute Palma ratio’), inflation-adjusted
e No wealth: The proportion of households with no (or negative) wealth

2.5 Who are the wealthiest and least wealthy households

Some people are more likely to be wealthy than others - for example, many people nearing retirement will have accumulated a considerable amount of wealth over their working lives, and are getting ready to use it up, whereas many young people are only starting to build wealth.

While this accumulation of wealth over time and with age is natural, some groups of the population are excluded from this process, as they don’t have any income to spare for saving up, or they cannot afford to get on the property ladder, or they are not enrolled in any private pension scheme.

The charts below show the total wealth of a typical household (median wealth) for a wide range of household characteristics, comparing each group with the Scotland average. Examples of households with above average wealth are pensioner couples, married couples, home owners, or households with degree-level qualifications. Examples of households with below average wealth are lone parent households, households in social rented housing, or households where the household reference person2 is unemployed or economically inactive (but not retired).


Note that small differences in median wealth between different household types may not be meaningful and should be interpreted with care. This is because these estimates are based on a sample survey and could be slightly higher or lower if we interviewed a different sample of the population.

Household type

Marital status

Age

Disability

Tenure

Qualification

Economic status

Table

Table 2.6 Median total household wealth by household type, Scotland 2016-2018
Median wealth
Household type
Lone parent £35,300
Other type £162,100
Pensioner couple £682,500
Single female pensioner £202,600
Single male pensioner £263,300
Working-age couple with children £254,300
Working-age couple, no children £407,300
Working-age man, no children £89,100
Working-age woman, no children £102,400
Marital status
Cohabiting £104,100
Divorced £127,100
Married £438,000
Separated £160,700
Single £61,500
Widowed £178,200
Age
16-34 £60,300
35-44 £174,900
45-54 £297,100
55-64 £468,200
65-74 £423,200
75+ £249,100
Disability
No-one disabled £260,000
Someone disabled £168,400
Tenure
Buying with mortgage £292,400
Owning outright £567,100
Private renting £44,600
Social renting £34,000
Qualification
Degree-level qualification or above £396,100
No qualification £82,600
Other qualification £218,300
Economic status
Employed £240,100
Inactive/Unemployed £24,400
Retired £370,000
Self-employed £292,500
All households
All £233,400
a Source: Wealth and Assets Survey
b Marital status, age, qualification and economic status refer to the household reference person.
c Note that median wealth refers to that of the whole household; therefore, the more people live in the household, the larger their wealth

3. Financial Wealth and Debt

Financial wealth is the sum of all financial assets (such as bank accounts, savings accounts, stocks and shares) minus all liabilities (such as overdrafts, loans, credit card debt, and arrears on household bills). These can be formal assets, such as savings accounts or loans from banks, or informal assets, such as money held at home, or borrowing from friends and family.

In this section, we are looking at how financial wealth is distributed across households in Scotland. We’ll look at those households at the extreme bottom of the distribution, who have debt beyond what they can manage, and those further in the middle who may be alright now, but are potentially vulnerable in case of a sudden loss of income.

3.1 Financial wealth distribution

A typical household in Scotland had £5,500 in financial wealth after any non-mortgage debt was deducted.

A household in the top decile ( = 10% band) of the population had on average £215,000, whereas one in the bottom two deciles had negative financial wealth, or in other words, they were in debt.

As shown in section 2.2 Wealth inequality by wealth type, financial wealth is more unequally distributed than pension, property and physical wealth.

Financial wealth distribution

Over time

Table

Table 3.1 Median net financial wealth by financial wealth decile, Scotland
Financial wealth decile 2006-2008 2008-2010 2010-2012 2012-2014 2014-2016 2016-2018
1 £-8,500 £-9,500 £-11,400 £-7,600 £-9,100 £-11,000
2 £-900 £-1,200 £-1,700 £-700 £-600 £-2,200
3 £100 £100 £100 £100 £200 £0
4 £800 £1,100 £600 £800 £1,000 £1,000
5 £3,400 £3,900 £2,200 £2,100 £2,800 £3,200
6 £8,400 £9,700 £6,600 £5,800 £7,200 £8,000
7 £18,600 £20,500 £13,900 £14,200 £15,400 £18,500
8 £38,100 £39,400 £27,900 £30,500 £32,100 £38,500
9 £70,200 £75,800 £61,100 £71,400 £72,100 £81,100
10 £184,200 £201,200 £172,100 £210,100 £203,000 £215,000
All £5,400 £6,600 £3,700 £3,600 £4,600 £5,500
a Source: Wealth and Assets Survey
b Amounts are adjusted for inflation and are in 2016-2018 prices

3.2 Unmanageable debt

Some households not only have no financial wealth, but they are debt, or even in unmanageable debt. The definition of Unmanageable Debt is identical to the Office for National Statistics’ Problem Debt definition, see their Household debt in Great Britain report3. A household is defined as being in unmanageable debt if they have liquidity problems or solvency problems, or both. Liquidity problems mean people struggle with their debt repayments and are falling behind with bills. Solvency problems mean people have a large amount of debt and feel heavily burdened by it.

Unmanageable debt in Scotland is monitored within Scotland’s National Performance Framework4.

Who is in unmanageable debt?

In Scotland in 2016-2018, 2.9% of households were in unmanageable debt, and this follows a largely decreasing trend since 2010-2012, when measurement started.

Some types of households are more likely to be in unmanageable debt than the Scottish average. For example, this includes lone parent households and younger households.


Note that small differences in these estimates may not be meaningful and should be interpreted with care. This is because the estimates are based on a sample survey and could be slightly higher or lower if we interviewed a different sample of the population.

Household type
Age
Marital status
Disability
Qualification
Tenure
Over time
Tables
Table 3.2 Proportion of households in unmanageable debt, Scotland
2010-2012 2012-2014 2014-2016 2016-2018
All households
All 5.6% 4.0% 2.8% 2.9%
Age
16-34 8.0% 7.0% 7.8% 6.3%
35-44 10.8% 8.0% 4.2% 5.5%
45-54 6.0% 5.4% 3.6% 4.1%
55-64 5.4% 1.8% 1.3% 0.5%
65-74 1.4% 0.7% 0.2% 0.5%
75+ 0.3% 1.6% 0.6% 0.0%
Household type
Lone parent 20.0% 12.9% 5.3% 9.1%
Other type 2.1% 6.3% 6.5% 2.2%
Pensioner couple 0.9% 0.4% 0.1% 0.0%
Single female pensioner 1.3% 1.4% 0.3% 0.0%
Single male pensioner 2.6% 0.0% 2.0% 1.4%
Working-age couple with children 8.4% 4.6% 3.8% 3.1%
Working-age couple, no children 3.9% 3.5% 2.5% 2.6%
Working-age man, no children 6.9% 7.5% 4.6% 4.9%
Working-age woman, no children 10.5% 7.1% 4.9% 4.6%
Children in household
With children 10.5% 6.6% 4.3% 4.5%
Without children 3.9% 3.1% 2.3% 2.3%
Disability
No-one disabled 4.6% 3.2% 2.5% 3.2%
Someone disabled 7.9% 5.7% 3.5% 2.3%
a Source: Wealth and Assets Survey
b Time series are provided for characteristics that are included in the National Performance Framework5
c Age refers to the household reference person.
Table 3.3 Proportion of households in unmanageable debt, Scotland 2016-2018
Proportion in unmanageable debt
Qualification
Degree-level qualification or above 1.5%
Other qualification 3.8%
No qualification 2.5%
Marital status
Married 1.3%
Cohabiting 6.0%
Single 5.7%
Widowed 0.0%
Divorced 3.5%
Separated 8.2%
Tenure
Owning outright 0.5%
Buying with mortgage 2.7%
Private renting 5.7%
Social renting 5.1%
a Source: Wealth and Assets Survey
b Marital status and qualification refer to the household reference person.

3.3 Financial vulnerability

In this analysis, we looked at households in Scotland that are financially vulnerable. We found that 34% of households (or 810,000 households) were financially vulnerable during 2016-2018.

Most poverty analysis is focused on people’s income only and says nothing about their savings. But when a household suddenly loses a large part of their income, for example because someone loses their job, then some households are able to draw on their savings to pay the rent and shop for food until a new job is found, while other households may have no savings to draw on.

In order to understand how many households might struggle if they lost their main source of income, we looked at people’s savings. Having an emergency fund might become more important in times where the future of the Scottish labour market is uncertain, for example because of Brexit.

Definitions

In this analysis, we call a household financially vulnerable when there are not enough savings to cover basic living costs for three months. We chose three months because if someone loses their job, it can often take a few months until they have started a new one or get paid benefits6.

Under basic living costs we include average costs of rent, food and fuel, such as gas and electricity. Of course, households with more adults and children have higher costs than smaller households, so we used different costs for different household sizes. On average, Scottish households spent £1,535 on basic living costs over three months in 2016-20187.

Under savings we include any kinds of savings and investments that can be turned into cash within a few days. This includes current, ISA and savings accounts, premium bonds, stocks, shares and trusts, but not fixed-term or dividend-only investment products. From this, we take off current account overdrafts, any arrears, and repayment commitments for three months from loans, credit cards, store cards, mail orders, and purchase hire.

Who is financially vulnerable?

Using the definitions above, we find that on average, 34% of households were financially vulnerable in 2016-2018. We call the remaining 66% of households financially resilient.

The chart below shows that households with lower incomes are more often financially vulnerable compared to those with higher incomes. However, vulnerable households are found in all income bands across Scotland. Even some households with the highest incomes have little savings and might struggle if their income suddenly stopped. And on the other hand, some low-income households do have enough savings to tide them over a tough spot.

Income

Table

Table 3.4 Proportion of households who are financially vulnerable, Scotland 2016-2018
Income decile Proportion of households
1 55%
2 45%
3 54%
4 39%
5 39%
6 24%
7 25%
8 22%
9 19%
10 12%
All 34%
a Source: Wealth and Assets Survey; Living Cost and Food Survey
b Income deciles are based on equivalised net household income

Characteristics

We found financially vulnerable households across all population groups. The groups of households that are most likely to be financially vulnerable (workless, young, with children, lone parents) are often small, so the bulk of financially vulnerable households is made up of households with different characteristics: they often are working-age couples in employment and living in rented homes.

The charts below show both, how likely a group is to be financially vulnerable, and how large each group is. On the horizontal axis, the likelihood is shown, and the area of the rectangles shows how many households are in each group.


Note that small differences in these estimates may not be meaningful and should be interpreted with care. This is because the estimates are based on a sample survey and could be slightly higher or lower if we interviewed a different sample of the population.

Household type

Marital status

Children

Age

Economic status

Disability

Qualification

Tenure

Table

Table 3.5 Proportion of households who are financially vulnerable among all households, and among financially vulnerable households (composition) in each group, Scotland 2016-2018
Proportion Composition
Household type
Single male pensioner 16% 2%
Single female pensioner 18% 5%
Working-age man, no children 47% 15%
Working-age woman, no children 42% 14%
Lone parent 73% 11%
Pensioner couple 10% 4%
Working-age couple, no children 31% 20%
Working-age couple with children 40% 23%
Other type 43% 6%
All 34% 100%
Marital status
Married 25% 35%
Cohabiting 52% 15%
Single 48% 26%
Widowed 24% 8%
Divorced 40% 12%
Separated 42% 4%
All 34% 100%
Children in household
No children 29% 64%
1 child 50% 19%
2 children 41% 12%
3+ children 57% 5%
All 34% 100%
Age
16-34 50% 22%
35-44 44% 21%
45-54 41% 26%
55-64 28% 15%
65-74 22% 10%
75+ 14% 5%
All 34% 100%
Economic status
Self-employed 35% 6%
Retired 18% 15%
Inactive/Unemployed 71% 26%
Employed 34% 53%
All 34% 100%
Disability
No-one disabled 32% 62%
Someone disabled 38% 38%
All 34% 100%
Qualification
Degree-level qualification or above 20% 18%
Other qualification 38% 57%
No qualification 45% 24%
All 34% 100%
Housing tenure
Owning outright 10% 9%
Buying with mortgage 32% 31%
Renting 58% 60%
All 34% 100%
a Source: Wealth and Assets Survey; Living Cost and Food Survey
b Age, economic status and qualification refer to the household reference person
c Social and private rented sectors were combined in this analysis, as living costs were based on average rents.

How much do financially vulnerable households need to be resilient?

Over £1.7 billion would be required to make every household in Scotland financially resilient.

The table below shows examples of different kinds of households and how many of them are estimated to be financially vulnerable. The households are grouped by tenure, age and work status of the household reference person, and whether there are any dependent children in the household.

The table also shows how much money the different groups would need to be financially resilient, overall as a group (total gap), and on average per household (median gap). The main reason why the average amounts differ between groups is that the groups have different household sizes. For example, households with children generally contain more people and have therefore higher costs of living. And in some cases, the median gaps are quite high because many vulnerable households not only have no savings, but they are also in debt.

Households with children and a mortgage had the largest average gap, £2,300 per household. The main reason for this is that they had higher living costs.

The largest group of financially vulnerable households were workless working-age households who rent their homes, 180,000 households. But their average gap per household (£1,400) was below the Scotland average of £1,600.

The tree map shows which groups from the table are larger or smaller.

Cost of financial resilience table

Table 3.6 Number of households who are financially vulnerable and cost of filling that gap in each group, Scotland 2016-2018
Group Number of households Total gap Median gap
Renting, 65+ 80,000 £104 million £800
Renting, 16-64, Working, with children 100,000 £206 million £2,000
Renting, 16-64, Working, no children 120,000 £242 million £1,600
Renting, 16-64, Workless 180,000 £308 million £1,400
Buying with mortgage, with children 120,000 £306 million £2,300
Buying with mortgage, no children 130,000 £371 million £1,300
Owning outright 70,000 £157 million £1,100
All 810,000 £1,693 million £1,600
a Source: Wealth and Assets Survey; Living Cost and Food Survey

Tree map

4. Property Wealth

Property wealth (net property wealth) is the value of all property owned (the main residence and any other property owned) less any debt on the property (e.g. mortgage) and equity release. It is derived from respondents’ own valuations of their properties, rather than any survey valuation. If someone’s outstanding mortgage liabilities exceed the value of their property they are in property debt.

4.1 Property wealth distribution

66% of households in Scotland owned some property in 2016-2018, while 34% had none.

Even so, property wealth is more equally distributed than financial and pension wealth, as shown in section 2.2 Wealth inequality by wealth type.

The average property wealth among property-owners was £120,000. A typical household in the top decile ( = 10% band) of the population that owned some property had on average £430,000 in property wealth, and one in the bottom decile had £19,700.

In recent years, property wealth appears to be slowly increasing again for all but the wealthiest property owners, after a period of property wealth decline between 2006-2008 and 2012-2014.

Property wealth distribution

Over time

Table

Table 4.1 Median net property wealth by property wealth decile, Scotland
Property wealth decile 2006-2008 2008-2010 2010-2012 2012-2014 2014-2016 2016-2018
1 £21,200 £17,600 £17,600 £15,800 £15,400 £19,700
2 £54,100 £52,600 £48,900 £42,000 £46,400 £49,000
3 £77,500 £71,400 £70,100 £63,000 £63,900 £66,000
4 £97,200 £93,600 £88,000 £84,000 £85,500 £82,000
5 £117,500 £112,300 £110,000 £101,800 £103,000 £106,000
6 £141,400 £140,400 £132,000 £131,200 £133,900 £135,000
7 £173,400 £175,500 £165,000 £160,600 £172,000 £170,000
8 £221,400 £210,600 £209,000 £199,500 £206,000 £205,000
9 £289,300 £269,100 £275,000 £262,500 £267,800 £258,200
10 £443,600 £438,800 £440,000 £451,500 £437,800 £430,000
All £124,200 £121,700 £118,500 £115,500 £123,600 £120,000
a Source: Wealth and Assets Survey
b Amounts are adjusted for inflation and are in 2016-2018 prices
c Only households with property are included in this analysis.

4.2 Who has property wealth?

A recent report commissioned by the Poverty and Inequality Commission Scotland showed that fewer households in Scotland are now able to own any property, and property wealth is getting concentrated in fewer and wealthier households8.

Some characteristics of households that are more or less likely to have any property wealth are shown in the chart below. For example, single working-age adults, and in particular lone parents often don’t have any property wealth, whereas pensioner couples often do. Households where the reference person is young, has no (formal) qualification, or is unemployed or inactive (but not retired) are also less likely to have any property wealth compared to older households, or households with a highly qualified, retired or employed household reference person.


Note that small differences in these estimates may not be meaningful and should be interpreted with care. This is because the estimates are based on a sample survey and could be slightly higher or lower if we interviewed a different sample of the population.

Household type

Age

Marital status

Economic status

Disability

Qualification

Tables

Table 4.2 Proportion of households who own property, Scotland 2016-2018
Proportion of households
Household type
Single male pensioner 61%
Single female pensioner 68%
Working-age man, no children 55%
Working-age woman, no children 47%
Lone parent 28%
Pensioner couple 89%
Working-age couple, no children 72%
Working-age couple with children 78%
Other type 46%
Marital status
Married 83%
Cohabiting 52%
Single 48%
Widowed 63%
Divorced 45%
Separated 58%
Age
16-34 48%
35-44 69%
45-54 64%
55-64 71%
65-74 75%
75+ 71%
Economic status
Employed 71%
Self-employed 76%
Inactive/Unemployed 23%
Retired 74%
Disability
No-one disabled 71%
Someone disabled 56%
Qualification
Degree-level qualification or above 80%
Other qualification 66%
No qualification 43%
All households
All 66%
a Source: Wealth and Assets Survey
b Age, economic status and qualification refer to the household reference person.

5. Pension Wealth

Private pension wealth is an estimate of the value of wealth held in private (non-state) pension schemes, expressed as an equivalent ‘pot of money’. It comprises occupational and personal pensions and includes pensions of public sector workers. The estimate is based only on the pension rights accumulated to date and does not include rights which may be built up in future.

The most common private pension schemes are:

  • occupational defined contribution pensions
  • personal pensions
  • occupational defined benefit pensions

For the first two, benefits are determined by the contributions paid into the scheme, the investment return on those contributions and the type of annuity (if any) purchased upon retirement. For the last one, the benefits to be paid are salary related and based on number of years of pensionable service and accrual rate.

More detail about how pension values are determined and current trends in pension schemes and distributions can be found in the Office for National Statistics’ Pension Wealth in Great Britain publication9.

Wealth is generally accumulated over a person’s lifetime, and this link between age and wealth is particularly relevant for pension wealth. Working-age adults generally increase their pension pots (active or preserved pensions10), while pensioners have pensions in payment.

The sections below consider the pension wealth distributions of households, individual adults who have some pension wealth, and the household types that are more or less likely to have any pension wealth.

5.1 Pension wealth distribution

82% of households in Scotland had some private pension wealth in 2016-2018, and 18% had none. Of those households that did, their pension wealth was on average £125,500. The bottom 10% households with pension wealth had on average £1,500, and the top 10% households had more than £1 million in pension wealth.

Over time, average pension wealth steadily increased, except for the last period (2016-2018), where the increase stalled or reversed for all but the households with the highest pensions wealth.

Pension wealth distribution

Over time

Table

Table 5.1 Median pension wealth by pension wealth decile, Scotland
Pension wealth decile 2006-2008 2008-2010 2010-2012 2012-2014 2014-2016 2016-2018
1 £3,700 £2,900 £3,900 £4,100 £2,600 £1,500
2 £10,900 £12,800 £12,100 £14,700 £15,200 £10,500
3 £22,300 £23,400 £26,100 £34,100 £35,300 £27,000
4 £36,700 £39,300 £42,500 £58,700 £71,500 £59,400
5 £57,100 £62,500 £62,800 £95,700 £111,400 £99,700
6 £91,300 £94,000 £95,400 £145,400 £184,000 £156,700
7 £138,700 £139,500 £151,700 £210,000 £254,900 £259,300
8 £209,900 £219,700 £243,200 £318,200 £374,600 £397,600
9 £335,800 £356,600 £400,100 £508,000 £581,900 £640,200
10 £703,100 £737,400 £820,800 £1,010,600 £1,080,300 £1,142,400
All £72,700 £76,100 £76,700 £117,100 £140,400 £125,500
a Source: Wealth and Assets Survey
b Amounts are adjusted for inflation and are in 2016-2018 prices
c Households with no pension wealth are excluded from this analysis.

5.2 Pension participation

The proportion of Scottish households with some private pension wealth was 82% in 2016-2018. In many of these households, adults are continuing to add to their pension pots, while in other, generally older households, adults are already receiving private pension payments. Where someone has more than one private pension, it is also possible to have a pension in payment, and another one that is not in payment yet.

To distinguish between these two types of pension wealth, the following sections separately look at pensions not yet in payment, and pensions that are in payment.

Note that this section shows individual adults with private pensions, whereas the previous and the following sections are about households - the household pension wealth distribution, and the types of households that are more or less likely to have any pension wealth.

Saving for a pension

More men than women had a private pension that is not yet in payment (51% of men versus 46% of women), and this gap was caused by adults aged 55 and older.

Over time, the proportion of adults with pension wealth (not yet in payment) has been increasing as more and more people are automatically enrolled into workplace pension schemes11, and the gender gap has been closing.

Saving for a pension