© Institute for Fiscal Studies The wealth and

Transcript:© Institute for Fiscal Studies The wealth and:
© Institute for Fiscal Studies The wealth and saving of UK families on the eve of the crisis Thomas F. Crossley and Cormac O’Dea Institute for Fiscal Studies © Institute for Fiscal Studies IFS Retirement Saving Consortium Association of British Insurers Bank of England Barclays Chartered Institute of Personnel and Development Department for Work and Pensions Financial Services Authority HM Revenue and Customs HM Treasury Investment Management Association Pensions Regulator Personal Accounts Delivery Authority Scottish Widows The Actuarial Profession © Institute for Fiscal Studies Motivation for this research: Where to look to study Household Saving? Most high profile measure of Household Saving is the ONS Household Saving Ratio, released quarterly. This is a measure of the total saving undertaken in the economy © Institute for Fiscal Studies Household Saving Ratio, Annual, 1963 - 2009 Report Figure 1.1, Source: ONS © Institute for Fiscal Studies Household Saving Ratio, Quarterly, 2000-2010 Source: ONS © Institute for Fiscal Studies Household Saving Ratio The most high profile measure of Household Saving is the ONS Household Saving Ratio, released quarterly. This is a measure of the total saving undertaken in the economy A useful summary of the total volume of saving being done in the economy. But we would caution against relying on it for questions related to the adequacy of wealth for retirement It is dominated by the saving of the those with the greatest income. Contains limited information about trends in saving among those with low and middle incomes. An economy-wide average: contains no information on distributional questions such as who saves and who doesn’t. Measured with a great deal of uncertainty Calculated as the difference between two large aggregates, themselves measured with error. Can we look at household saving using microdata? © Institute for Fiscal Studies © Institute for Fiscal Studies In the report, using the British Household Panel Survey, we calculate two measures of wealth... Liquid Financial Wealth Balances in savings accounts plus bonds/equities less non-mortgage debt Financial and Housing Wealth Liquid Financial Wealth plus value of housing less outstanding mortgage debt Use these measures to: Calculate saving rates between the two years which is: © Institute for Fiscal Studies In the report, using the British Household Panel Survey, we calculate two measures of wealth... Liquid Financial Wealth Balances in savings accounts plus bonds/equities less non-mortgage debt Financial and Housing Wealth Liquid Financial Wealth plus value of housing less outstanding mortgage