Pensions make up more than any other component of total net household wealth at 42 per cent, although inequalities remain within pension provisions, data from the Office for National Statistics (ONS) has revealed.

The ONS noted that the proportion of pension wealth has increased over the past 14 years, likely due to the introduction of auto-enrolment, increases to state pension age, and varying defined benefit (DB) pension pot valuations.

Retired households were found to be wealthier than those of working age, with an average household wealth of £489,300 for retired households compared to £302,500 for those of working age.

However, pensions were one of the areas with the greatest inequality, as the data showed that whilst the top 1 per cent held average household pension assets of around £2m, the average pension for those aged 55-65 was just over £200,000.

Hargreaves Lansdown senior pensions and retirement analyst, Helen Morrissey, highlighted the data as demonstration of “the power of pensions as a wealth building strategy” with private pensions making up the largest component of total wealth.

She also noted that whilst age will play a role, as older people will have had a longer time to save and the increased likelihood of being a member of a final salary pension, the data “clearly shows pensions are a powerful tool”.

Read more @Pension Age