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You can’t take it with you

The UK is on the cusp of a large-scale wealth transfer, according to new research from St. James’s Place.

The struggle of younger generations to get on the housing ladder is widely viewed as a detractor to social progress. Yet housing isn’t the only area where younger people tend to get left behind. They are also very often denied access to generous final salary pension schemes and to the university funding that their parents’ generation enjoyed.

Not only does this have implications for the wider economy, but also on the quality of social relationships. There is no better example of the demographics dividing Britain than the election result earlier this month. The Conservatives’ failure to win a majority was in part influenced by the young, who turned out in force, perhaps to vote against a range of perceived injustices, including housing inequality, university fees, stagnant job creation and a resulting lack of social mobility.

The contrasting fortunes of those who entered the workforce in the 1960s and 70s goes some way to explain why wealth in the UK is concentrated in the hands of older households.  Collectively, over 65s hold about two-fifths of the nation’s £11.1 trillion total wealth, with average wealth of £377,000 per capita. A further two fifths are held by those aged between 45 and 64, with average head of £260,000 each. Those aged 18-44, meanwhile, own just a fifth between them – £100,000 each.1

Some of this is simply down to the usual pattern one would expect in the accumulation of wealth over a lifetime. People save, invest, pay down mortgages and accrue pension entitlements over many years. Nevertheless, there are signs that younger generations will struggle to enjoy similar wealth even in old age. They are the first postwar cohort not to at least start working-age life with higher real incomes than their predecessors had at the same age.2 Soaring house prices, meanwhile have caused home ownership among 25 to 34-year-olds to slide to 36% – down from 60% little more than a decade ago3.

Old money

Yet new research reveals that, far from denying younger generations their fair share, many families are trying to span the wealth divide. The study, which was commissioned by St. James’s Place in conjunction with Capital Economics, showed that there is an estimated £6.6 trillion of wealth held by those aged 55 years and over in the UK, of which some £920 billion will be gifted to younger generations over the next three decades.4

This generosity will not just help those receiving it, but will make a powerful contribution to the economy in the years ahead. Over the next 30 years, wealth transfer will potentially add £677 billion to the economy, or 1.2% of UK GDP each year – enough to fund the purchase of around 3.4 million homes for first time buyers5, provide 21.2 million deposits6, or pay for 24 million students’ tuition fees.7

“The economic contribution made by older people in the UK transferring wealth to the younger generations is huge – for every £1 transferred, £1.65 is generated for the UK economy8,” says Iain Rayner, Joint Chief Operating Officer at St. James’s Place.

“On average, 55 to 85 year olds transfer £40,000 to their children, grandchildren and family members, mainly for housing, university education or other major purchases.  These are serious sums of money and, collectively, represent a vast wave of wealth that our research shows is about to be transferred.  This will have a significant impact on the finances of the recipients and the wider economy as this wealth floods into the market,” Rayner adds.

“Families need to think about how and when they intend to make transfers to maximise the impact and achieve the most beneficial tax treatment – and lucky recipients really need to think about how and when to best deploy these gifts to help them achieve their financial goals.”

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

1 ‘Wealth and Assets Survey: July 2012 to June 2014’, Office for National Statistics, December 2015

2 ‘The economic circumstances for different generations’, 2016, Institute for Fiscal Studies:
3 English Housing Survey (EHS) Headline Report 2013– to 2014, Department for Communities and Local Government, October 2015
4 St. James’s Place commissioned research carried out by Capital Economics to a sample of 2,002 UK nationally representative adults aged over 55 years, conducted between 1st and 6th of March 2017. Economic analysis and insights from the consumer research were supported by Capital Economics.
5 Based on an average first time buyer house purchase price of £198,325.  Source:, 7 March 2017
6 Based on an average first time buyer deposit of £32,000.  Source:,  13 January 2017
7 Based on an average tuition fees of £27,750.  Source:, accessed 22 June 2017
8 Based on Capital Economics’ estimate on the marginal propensity to consume.

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