New research has shown that Britons’ personal wealth is tied up primarily in homes, pensions and cash.
Abdon’s analysis of national accounts shows that UK savers invest just 8% of their assets directly in stocks and mutual funds, compared to 33% in the US and an average of 14% in the rest of the G7 countries. .
Asset managers have repeatedly called on the government to encourage shareholding to avoid what they see as a retirement crisis. “There are questions about how far[the UK government]will be able to support an aging population… and retirement funds will increasingly fall short of what people need,” said Xavier, chief executive of Abdon’s investment business.・Mr. Meyer said.
“Personal savings and investment need to increase to make up for this shortfall,” Meyer said, suggesting Britons could look to other G7 countries for inspiration. “It wouldn’t hurt to take some lessons from our international neighbors,” he added.

Rais Khalaf, head of investment analysis at AJ Bell, said in the U.S., a “risk-taking culture” and a booming domestic stock market are driving individuals’ wealth into stocks.
The S&P 500 index of large U.S.-listed companies has risen more than 1,100 percent over the past 30 years, far outpacing its G7 peers. Over the same period, the UK’s FTSE 100 index rose just 135 percent.
Khalaf said the long-standing trend in the U.S. of “people managing their own pensions” through 401(k) plans encourages individuals to actively manage their money and invest in stocks. he added.
Mr Abdon’s analysis puts the UK at the top of the list for pension funds. 19 percent of the country’s personal wealth is allocated to pensions, compared to 17 percent in the United States and 6 percent in Germany (the lowest in the G7).
Chancellor of the Exchequer Rachel Reeves is trying to lock in pension funds’ investments in British stocks, with the aim of revitalizing British companies and fueling infrastructure projects.
Think tank New Financial estimates that UK pension funds have cut their allocation to UK equities from just over half of their total assets in 1997 to 4.4% today, and the proportion is even lower among defined contribution schemes. The rate is as high as 8%.
Susannah Streeter, head of funds and markets at investment platform Hargreaves Lansdown, said money from British pension funds was flowing into global markets because of higher yields. “This (dissuades) companies from listing in the UK. When fewer companies list, there are fewer opportunities because UK investors are not as excited about returns.”
The Prime Minister proposed merging pension systems in November to boost domestic investment, but so far the plans have failed to direct any money to the UK.

Approximately 15% of personal wealth in the UK is held in cash, similar to other European G7 countries, but in Japan, where just over a third of all personal wealth is held in cash, this proportion is half that. It’s not even enough.
“Japan still bears the scars of the period of stock market and real estate market collapse that began in the late 1980s,” said Darius McDermott, managing director at advisory firm Chelsea Financial Services. “Then we had a long period of deflation and low interest rates,” which allowed savers to hold cash without worrying about it losing value, he added.
In response to recent increases in inflation, the Japanese government introduced larger investment tax cuts last year. In January 2024, the Japanese Individual Savings Account (NISA), first introduced in 2014 and based on the UK Isa, was expanded to include more attractive tax exemptions. The enhanced NISA offers individuals lifetime tax exemption on stock investments, and contribution limits have tripled.
The UK Isa system has been around for more than 25 years, has been used by more than 22 million people, and is hailed as a success, but analysis by financial platform AJ Bell shows that only 3. 2 hold only cash, advisors noted. Latest data from HM Revenue & Customs for 2021-2022.
Streeter pointed out that the ISA threshold has not been increased since 2017. “I think this is a bit of a disincentive because a greater tax-free regime for buying equity funds would encourage more investment in the stock market.”
The UK is broadly in line with other European G7 countries on housing, with around half of personal wealth allocated to the asset class, but in countries where house prices are high residents have no choice but to put the majority of their wealth into housing. There may not be one. brick and mortar.
Only a quarter of personal wealth in the United States is in housing, a fact that may be related to a “higher stock allocation” in American households and “some scarring from the financial crisis” that hit the United States. James McCann, Abdoun’s deputy chief economist, doubts that. The US is doing worse than other G7 housing markets.
Mr. Abdon’s analysis included the full value of the home owned and did not subtract the mortgage debt.
Myron Jobson, senior personal finance analyst at investment platform Interactive Investor, said Britain’s “bricks and mortar focus” and strong property market had created a generation of landlords. “And you have the dual benefit of the income you get from renting the property and the capital increase from your initial investment,” he added.
Yoland Burns, director of the Bartlett Institute of Real Estate at University College London, said a country’s “wealth spectrum” was the most important factor determining people’s asset allocation.
Burns cited research from the Resolution Foundation, a think tank, that found that “only the wealthiest individuals tend to use high-risk, high-return investments such as stocks in their asset portfolios.” said. “Moderately wealthy people tend to spend more on real estate, primarily housing,” she says.
Therefore, the high equity allocation in the US is partly explained by the large number of high-net-worth individuals who have a much higher propensity to invest in stocks and other high-risk instruments, he added.
Mr Abdon said the figures differed from other asset allocation estimates (such as the Office for National Statistics’ Wealth and Assets Survey) due to differences in data sources, methodological assumptions and how asset values were aggregated. Ta. The government said it used national accounts figures as “the fairest and best way to compare countries.”
The asset manager will publish the full figures on Monday in its ‘Tell Sid and Tell his again’ report on how to encourage retail participation in capital markets.