Pension financialization and workplace pension wealth inequality: Evidence from Britain

Bruno Bonizzo; Hulya Dagdeviren; Ben Tippet

doi:10.1093/ser/mwaf068

Pension financialization and workplace pension wealth inequality: Evidence from Britain

Bruno Bonizzo, Hulya Dagdeviren, Ben Tippet

Research output: Contribution to journal › Article › peer-review

Abstract

The growth of Defined Contribution (DC) pensions, in which retirement depends on individual savings and financial market investments, has been a key aspect of
household financialization. This article examines the impact of the shift from
Defined Benefit to DC pensions on workplace pension wealth inequality in Britain.

We propose a conceptual framework to interpret the effect of this shift, highlighting four key channels through which DC pensions can aggravate pension wealth inequality: the greater inequality of pension contributions, lack of redistributive mechanisms within pension schemes, the compounding effects of (missed) contributions over time, and unequal capacity to take on risks.

Using data from the UK Wealth and Assets Survey, along with quantile regression and decomposition analysis, we find corroborating evidence that reliance on DC pensions exacerbates workplace pension wealth inequality, supporting the plausibility of our proposed four channels.

Original language	English
Pages (from-to)	1-32
Number of pages	33
Journal	Socio-Economic Review
Volume	Vol.00
DOIs	https://doi.org/10.1093/ser/mwaf068
Publication status	Published - 24 Oct 2025

Keywords

pensions
financialization
wealth inequality
quantile regressions

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10.1093/ser/mwaf068Licence: CC BY-NC

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© The Author(s) 2025. Published by Oxford University Press and the Society for the Advancement of Socio-Economics. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial License (https://creativecommons.org/licenses/by-nc/4.0/)
Final published version, 1.53 MBLicence: CC BY-NC

Cite this

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title = "Pension financialization and workplace pension wealth inequality: Evidence from Britain",

abstract = "The growth of Defined Contribution (DC) pensions, in which retirement depends on individual savings and financial market investments, has been a key aspect of household financialization. This article examines the impact of the shift from Defined Benefit to DC pensions on workplace pension wealth inequality in Britain. We propose a conceptual framework to interpret the effect of this shift, highlighting four key channels through which DC pensions can aggravate pension wealth inequality: the greater inequality of pension contributions, lack of redistributive mechanisms within pension schemes, the compounding effects of (missed) contributions over time, and unequal capacity to take on risks. Using data from the UK Wealth and Assets Survey, along with quantile regression and decomposition analysis, we find corroborating evidence that reliance on DC pensions exacerbates workplace pension wealth inequality, supporting the plausibility of our proposed four channels.",

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AU - Bonizzo, Bruno

AU - Dagdeviren, Hulya

AU - Tippet, Ben

N1 - © The Author(s) 2025. Published by Oxford University Press and the Society for the Advancement of Socio-Economics. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial License (https://creativecommons.org/licenses/by-nc/4.0/)

PY - 2025/10/24

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N2 - The growth of Defined Contribution (DC) pensions, in which retirement depends on individual savings and financial market investments, has been a key aspect of household financialization. This article examines the impact of the shift from Defined Benefit to DC pensions on workplace pension wealth inequality in Britain. We propose a conceptual framework to interpret the effect of this shift, highlighting four key channels through which DC pensions can aggravate pension wealth inequality: the greater inequality of pension contributions, lack of redistributive mechanisms within pension schemes, the compounding effects of (missed) contributions over time, and unequal capacity to take on risks. Using data from the UK Wealth and Assets Survey, along with quantile regression and decomposition analysis, we find corroborating evidence that reliance on DC pensions exacerbates workplace pension wealth inequality, supporting the plausibility of our proposed four channels.

AB - The growth of Defined Contribution (DC) pensions, in which retirement depends on individual savings and financial market investments, has been a key aspect of household financialization. This article examines the impact of the shift from Defined Benefit to DC pensions on workplace pension wealth inequality in Britain. We propose a conceptual framework to interpret the effect of this shift, highlighting four key channels through which DC pensions can aggravate pension wealth inequality: the greater inequality of pension contributions, lack of redistributive mechanisms within pension schemes, the compounding effects of (missed) contributions over time, and unequal capacity to take on risks. Using data from the UK Wealth and Assets Survey, along with quantile regression and decomposition analysis, we find corroborating evidence that reliance on DC pensions exacerbates workplace pension wealth inequality, supporting the plausibility of our proposed four channels.

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KW - quantile regressions

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JO - Socio-Economic Review

JF - Socio-Economic Review

ER -

Pension financialization and workplace pension wealth inequality: Evidence from Britain

Abstract

Keywords

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