Earlier this month, the ILC-UK published research about how patterns of inheritance are changing. The research, which was undertaken in partnership with NatCen and made possible by a grant from Norwich Union, shows what many people would suspect: average bequests received are increasing. What perhaps is unexpected, and certainly suprised us, is the rate of increase: an increase of over 100% in less than a decade.
The clear driver of this trend is rates of property ownership among those at the peak age for mortality. With each cohort that reaches this age, the rate of property ownership increases, meaning more big inheritances to pass on. The research suggests this trend will continue for another decade or so. The highest rate of property ownership within any age-group is around 85%: this is the ownership plateau observable for the ages 35-70. So, even though property prices seem to be falling after a long period above-trend inflation, we can still reasonably hypothesise that the average value of inheritances received will continue to increase.
This trend has been a long-time coming and ultimately represents a side-effect of a ‘property-owning democracy’ and the UK’s obsession with house-ownership. Up till now, nobody has really considered the implications of so many people dying with such considerable levels of property wealth. These transfers of wealth will have dramatic effects on social policy, life-chances for all age groups, and equality of opportunity. Although undoubtedly good for a lucky recipient, transfers create real headaches for policymakers.
A further important implication of these trends is how to pay for an ageing population, and the extent to which individuals can rely on the state in retirement. Traditionally, many from a social policy background have looked to emphasise the role of the state, thereby preserving older people’s assets. But the side-effect of this approach, identified in the Age of Inheritance research, is to amplify societal inequality.
Already, commentators are questioning what the findings of the Age of Inheritance mean for debates on long-term care funding, and there is a thoughtful article about the research by David Brindle of the Guardian here: http://www.guardian.co.uk/society/2008/may/14/socialcare.society
However, this commentary and the discussion paper published simultaneously by the ILC-UK called Navigating the Age of Inheritance can only scratch the surface of what this trend around assets and inheritance mean for society. We would be interested to know the thoughts of others on what they see as the crucial policy challenges created by the Age of Inheritance.