Handelsbanken Wealth & Asset Management – The NEN

Nearly half of British adults expect fall in standard of living

Energy prices and cost-of-living crisis top list of financial concerns
Women are more concerned about external factors, such as a recession, impacting their finances
People plan to increase time spent reviewing their finances due to rising costs

Nearly half (46%) of UK adults are worried that their standard of living will fall over the next 12 months, reveals research conducted on behalf of Handelsbanken Wealth & Asset Management.

Concern was highest among those in their 30s (55%), dropping to 38% of over 50’s – likely due to accumulated savings.

Despite recent declines, energy prices still top people’s biggest concerns on the factors threatening their living standard, along with the cost-of-living crisis and high prices caused by inflation.

External risks worry women more

Women are more concerned than men about most external risks to their finances, including inflation (79% versus 72%), rising interest rates (59% versus 52%) and a recession (83% versus 73%). However, men worry more about geopolitical instability (57% versus 50% women) and stock market volatility (42% versus 37% women), with the latter perhaps due to being more inclined to invest, the research also revealed.

Divided on death and divorce

Men are more concerned about losing wealth through divorce (24% versus 19%), whereas women are more likely to fear the financial impact of their partner or spouse dying (47% versus 42%).

Proportion of people concerned about various factors impacting their personal finances

Factor	Overall proportion of individuals	Women	Men
Energy prices	78%	80%	74%
The cost-of-living crisis / recession	78%	83%	73%
Inflation	76%	79%	72%
A global economic downturn	63%	63%	63%
Rising interest rates	55%	59%	52%
Income tax increases	54%	56%	53%
Geopolitical instability	53%	50%	57%
Scams and frauds	51%	56%	46%
Death of a partner / spouse	45%	47%	43%
Stock market volatility	40%	42%	37%

Time invested

The study showed that these concerns are changing how much time we spend reviewing our finances each month.

On average, consumers spend over six hours a month on their finances, with groceries and other household costs taking up the most time (52 minutes) followed by bank account management (48 minutes), and paying for holidays (42 minutes). Wealthier people with assets over £100k spend longer keeping their financial house in order, averaging eight hours a month. Men, meanwhile, typically spend around 20% longer than women.

A tougher financial climate means we expect to spend more time managing our finances overall, largely in response to dealing with rising costs and stubborn inflation (48%) and the need to save more money (41%).

When it comes to those looking to decrease their time investment, nearly a third (29%) said they plan to reduce the time spent looking at their financial affairs as it makes them feel too anxious.

This may go some way towards explaining the fact that a significant proportion of people don’t currently spend any time at all reviewing commitments such as their pensions (33%), insurance (31%) or investments (23%).

Alasdair Wild, Area Manager at Handelsbanken Wealth & Asset Management, said: “Dealing with the ongoing cost-of-living and keeping your finances in check can be a time-consuming process and a real challenge for most people given there only are so many hours in the day.

“However, doing the bare minimum is unlikely to offer much protection in such a tough financial climate, and investing time to plan and manage your finances and, when required, bringing in external professional support, can make a real difference to protecting your standard of living.

“While avoiding the issue may provide temporary relief, it will only exacerbate problems down the line, so seeking support is key.”

Click here to view the full research report Gender and generation: unravelling the wealth gap.

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Over a quarter of women have no pension savings

Male pension pots are two thirds larger than women’s on average
Only 23% of women are confident they will be able to retire comfortably

Fewer women than men have pensions, and those who do are saving less than their male counterparts, reveals independent research conducted on behalf of Handelsbanken Wealth & Asset Management.

Handelsbanken Wealth & Asset Management’s report, Can we solve the gender wealth gap? highlights the disparity in retirement savings between men and women, revealing that over a fifth (26%) of women have no formal pension savings at all, compared to just 16% of men.

Women’s pension pots were found to be substantially smaller too. The average pension across amounts for all respondents stood at £103,037. However, male respondents’ pension pots were found to be significantly higher, averaging at £142,234, while women’s came in at just over a third of this, at an average of £51,384.

It is therefore unsurprising that only 23% of women surveyed stated they are confident that they will be able to retire comfortably, with over a third (35%) believing they won’t be able to.

However, there are signs that things could be turning around for the next generation. While women over the age of 40 are generally less likely to have a pension than men of a similar age (63% vs 80%), men and women in their 30s were found to be equally likely to have a pension (77%). For adults under 30, women were found to be more likely to have a pension than men (76% vs 59%).

The research also revealed that most people tend to leave the management of their pension to their workplace pension provider (45%). Men were slightly more likely than women (43% versus 37%) to manage their own pensions, such as via a self-invested personal pension scheme (SIPP).

However, more than half (56%) of those who self-manage their pensions admitted that they seldom check their retirement savings – of which 64% were female.

Christine Ross, Head of Private Office (North) & Client Director at Handelsbanken Wealth & Asset Management, said: “Women on average continue to remain a long way behind men in pension savings, with the problem at its most acute among older generations who are closer to retirement.

After decades of gender disparity, it’s encouraging to finally see clear evidence of change, with pension take up reaching parity among thirtysomethings, and women in their twenties ahead of their male counterparts.

The recent steps taken at a government level have the potential to further close the gender pensions gap, including the free childcare scheme expansion announced at the Spring Budget, which should allow more working mothers to return to the workplace and build their pension savings.

“But despite signs of progress, there is still considerable work to be done. Education around pensions needs to be improved, as does women’s confidence in financial products. We strongly encourage seeking advice on long-term financial planning where possible, to ensure that the plans you have in place are fit for purpose on an ongoing basis.

“Generally, it is important to review your pension regularly and to top up your workplace pensions where possible. If you’re unable to pay into a formal pension, there are plenty of other options to consider, including ISAs, which offer tax-free savings.”

More than 600,000 self-employed to miss self-assessment deadline?

Handelsbanken Wealth & Asset Management research shows self-employment is changing

More than 600,000 self-employed people think they will miss the January 31^st deadline for completing self-assessment tax returns and paying any money owed, new research* from Handelsbanken Wealth & Asset Management shows.

Data** from HM Revenue and Customs (HMRC) shows that a week before the deadline (January 24^th), around 3.4 million had still to file returns for the 2021/22 tax year and it is expecting 12 million returns in total compared with 10.8 million for the 2020/21 tax year.

Handelsbanken Wealth & Asset Management’s research found young men aged 18-34 are most likely to believe they will miss the deadline, with 13% of them fearing they won’t respond in time.

The study highlights how the rising number of self-assessment returns reflects changes in the way people are employed. It found half (50%) of working adults say they are a PAYE employee with no additional income while, more than a quarter (28%) are retired, meaning that nearly a third (29%) – 9.4 million people –are self-employed in some capacity. Many will have PAYE jobs and self-employment income on the side, while some will be entirely self-employed.

Men (25%) are more likely than women (16%) to have an income stream from self-employment, while younger adults aged between 18 and 34 are much more likely to be self-employed at 40%, compared with older age groups. Just 20% of those aged 35 to 54 are self-employed to some extent, and only 10% of those aged 55-plus have additional self-employed income.

The West Midlands is the UK’s ‘capital of the side hustle’, with 21% of workers saying they are PAYE with additional self-employed income compared to 10% for the UK as a whole.

Overall, the West Midlands has the highest number of people who make money through self-employment, with 33% of adults needing to fill in a self-assessment tax return, ahead of London (32%) and the South West (28%).

The rise of the side hustle is partly down to the cost-of-living crisis, but is also being driven by people deciding to follow their passion alongside their PAYE employment.

More than a third (35%) said they became self-employed to do something they are passionate about, while around a quarter (24%) did it to supplement the income they receive from their main job, due to the pandemic and cost-of-living crisis. Job satisfaction is more important to younger people, with 24% of those 18-34 saying they became self-employed because they were not enjoying their job, dropping to 21% for 35–54 and just 10% for the over 55s.

Mark Collins, Head of Tax at Handelsbanken Wealth & Asset Management said: “While tax doesn’t have to be taxing, as the old HMRC adverts say, filling in self-assessment forms becomes a little more complicated when people have a range of income streams from different sources.

“There is plenty of help available from HMRC however there is the possibility of a £100 fine for being late with further penalties kicking in after three months. This highlights the importance of seeking advice, being organised and keeping a close eye on your tax records, including business income and outgoings, throughout the year.”

Anyone struggling to complete forms can visit GOV.UK to access a wide range of resources including guidance, webinars and YouTube videos.

Pensions are safer than houses for retirement saving

Twice as many workers think pensions are a better bet than property for retirement saving
Nearly one in three who don’t save into pensions say other financial priorities mean they can’t afford to

Twice as many workers see occupational or personal pensions as a safer way of saving for retirement than property investment, new analysis* from Handelsbanken Wealth & Asset Management shows.

More than half (57%) of retirement savers who are still working believe pensions are the most secure retirement saving method, compared with 25% who chose property and one in seven (14%) who opted for ISAs, stocks and shares and saving accounts, according to Handelsbanken Wealth Management & Asset Management’s analysis of the latest Government data.

Those relying on property as their biggest source of income in retirement are even fewer – just 11% of those who are not retired expect it to be their most important source of income when they stop working. That compares with 46%, who think their main income will be from their occupational or private pension.

Some 23% believe their State Pension, benefits, or tax credits will be their largest source of income, while 12% think it will be their savings, investments, earnings, income from a business or sale of a business.

The data shows the number of people saving into pensions has risen to a new record high of 21.8 million after an increase of 40% – or 6.1 million – in the past decade, with most of this growth coming from new savers into defined contribution pensions.

Auto enrolment, which was launched in 2012 and made enrolment into workplace pensions automatic, has boosted the number of defined contribution pension holders to 9.9 million from 2.8 million, while the number of savers with defined benefit – or final salary – schemes has grown by 1.5 million to 8.8 million.

That has cut the number of people below State Pension Age who do not have a workplace or private pensions by 14% or 2.6 million in a decade, but there are still major issues for those who do not contribute. Nearly a third (29%) say they have too many other expenses, bills and debts or simply cannot afford a pension, while more than half (54%) say their income is too low, they are not working, or are still in education.

Christine Ross, Head of Private Office (North) and Client Director at Handelsbanken Wealth & Asset Management said: “It’s great to see confidence in pensions growing, with people rating them as the best way to save for retirement. More importantly, the number of people who are saving into pensions is increasing.

“It’s vital to use all of the tax-efficient options available to create a flexible retirement plan, as well as trying to start saving as early as possible, with the earliest savings having the longest period of time to grow.

“Employers are now obliged to make contributions for their staff, which helps many savers get on the retirement planning ladder. Some company pension schemes even offer additional ‘matching’ contributions if the employee pays more than the minimum. That can be as good as a pay rise and the money will grow, tax free, in the pension scheme for many years.”

Company pension schemes of course do not apply to the self-employed – and Handelsbanken Wealth Management & Asset Management’s analysis shows there is a greater reliance on property for retirement among those who work for themselves.

More than two-thirds (69%) of over-55s below State Pension age own a property, but that rises to 81% among the self-employed in that age group. And 25% of those that are self-employed in this age bracket own other properties in addition to their home compared to just 15% of those who are employed.

Wealth growth outstrips salaries by three times

Average wealth has increased by 59% in the past decade while earnings have grown just 19%
Even among the wealthiest the value of assets has grown by 64% compared with 20% for salaries

The growth in average wealth from assets including property and investments has been three times higher than the growth in average earnings over the past decade, new analysis* from Handelsbanken Wealth & Asset Management shows.

Figures show people are being out-earned by their homes and other investments, with average wealth rising 59% over the past decade compared with 19% growth in salaries over the same period, according to Handelsbanken Wealth Management & Asset Management’s analysis of the latest Government data on Britons’ wealth and assets and earnings.

Average wealth for Britons is estimated at £575,948 after a decade of growth from £361,831, with house price rises as well as increases in pensions, investments and physical wealth including possessions all appreciating in value since 2010. By contrast, average earnings have only increased to £31,840.

For the wealthiest 25% of the population, the growth in assets has been even more impressive – they now own wealth estimated at £733,800 compared with £447,900 a decade ago. They have seen their wealth increase 34% faster than the British average, while their salaries have increased 22% faster.

Of course, the growth in wealth has not been shared equally throughout the country – the wealthiest people in London have seen their wealth grow by 77% over the period to an average £902,400, compared with £495,200 in 2010.

The top 25% wealthiest in the North East have only seen growth of 30% during the same period, taking them to an average £459,500, which equates to an increase of £105,300. Growth among the top quartile of wealthiest people in the South East was 77% during the same period, compared with 69% in the East of England and 66% in the South and Wales. The North West saw growth of 45%.

PK Patel, Head of Wealth Management at Handelsbanken Wealth & Asset Management, said: “Earnings growth has on average been constrained over the past 10 years, with most people relying on their houses, investments, and possessions to boost their wealth.

“It is fascinating to see the gulf between the increase in asset values and the increase in average earnings over the past decade, and is instructive for advisers and their clients on how to plan their finances and assess their wealth.

“No matter how your total wealth is made up, it’s important to have a clear plan on how you want to use it for your own future and for the benefit of other family members.”

Table one: wealth and salary growth for the richest quartile by UK region, 2008-10 vs 2018-20

Region	Top quartile average wealth	Top quartile average salary
2008-10	2018-20	Growth	2010	2020	Growth
North East	£354,200	£459,500	30%	27736.5	£33,108	19%
North West	£387,400	£561,400	45%	29272	£35,256	20%
Yorkshire & the Humber	£376,300	£556,300	48%	28591.5	£33,890	19%
East Midlands	£415,500	£617,900	49%	29442	£35,204	20%
West Midlands	£399,200	£621,500	56%	28654.5	£35,003	22%
East of England	£511,500	£864,700	69%	33006.5	£38,938	18%
London	£495,200	£902,400	82%	39157.5	£47,423	21%
South East	£597,100	£1,058,000	77%	34775.5	£40,834	17%
South West	£485,300	£805,500	66%	28887	£34,434	19%
Wales	£383,900	£635,700	66%	27845.5	£33,453	20%
Scotland	£364,000	£584,800	61%	30072.5	£36,889	23%
Great Britain	£447,900	£733,800	64%	31401	£37,625	20%

Table two: average wealth and salary growth by UK region, 2008-10 vs 2018-20

Region	Average wealth	Average salary
2008-10	2018-20	Growth	2010	2020	Growth
North East	£271,385	£382,379	41%	£22,566	£27,343	21%
North West	£303,074	£452,151	49%	£24,074	£28,782	20%
Yorkshire & the Humber	£310,994	£444,366	43%	£23,433	£28,072	20%
East Midlands	£337,125	£473,284	40%	£24,294	£28,997	19%
West Midlands	£322,423	£471,564	46%	£23,733	£29,399	24%
East of England	£411,000	£680,549	66%	£28,095	£33,065	18%
London	£395,352	£678,545	72%	£37,746	£42,565	13%
South East	£491,410	£827,565	68%	£29,940	£35,040	17%
South West	£382,253	£630,258	65%	£23,980	£28,258	18%
Wales	£326,424	£515,767	58%	£22,381	£26,995	21%
Scotland	£301,504	£464,685	54%	£24,527	£30,097	23%
Great Britain	£361,831	£575,948	59%	£26,751	£31,840	19%