Over the last several decades, employers have moved away from pension-based retirement plans toward the 401(k) savings model. Participation in these do-it-yourself retirement savings plans is highly unequal across income groups because the system is stacked against those who can least afford to contribute and to bear investment risks. Lower-income workers get skimpier matching contributions from employers and often receive little or no tax benefit, but still face a penalty if they need to tap their savings early. According to new research by the Economic Policy Institute, nearly nine in 10 families in the top income fifth had retirement account savings, compared with fewer than one in 10 families in the bottom income fifth (see the first figure below). Additionally, families in the top income fifth accounted for 63 percent of total income, but 74 percent of total savings in retirement accounts (see the second figure below) illustrating the degree to which 401(k)s favor those with higher incomes.
Just 62 people own as muchPwealth as the poorer half of the global population, as the widening of the gap between the rich and poorPaccelerates.
As the business eliteP, an Oxfam report shows wealth is becoming further concentrated, with the number of people owning the same amount as the bottom half of humanityPfalling from 388 to 62 in five years. It says a \”broken\” economic model underpinned by deregulation, privatisation and financial secrecy has seen the wealth of the richest 62 people jump by 44 per cent in five years to US$1. 76 trillion ($2. 74 trillion). In that time, the wealth of the poorest 3. 6 billion people plunged by 41 per cent. READ MORE: \”The big winners in our global economy are those at the top. Our economic system is heavily skewed in their favour. PFar from trickling down, income and wealth are instead being sucked upwards at an alarming rate,\” the report said. Oxfam acknowledged that efforts to tackle inequality had seen the halvingPof the number of people living below the extremePpovertyPlinePbetweenP1990 and 2010. \”Yet had inequality within countries not grown during that period, an extra 200 million people would have escaped poverty.
That could have risen to 700 million had poor people benefited more than the rich from economic growth,\” it said. OxfamPsaid the growing problem of tax avoidance and use of tax havens was a prime example of how the economic system was \”rigged\” in the rich\’s favour and must be stopped. It is also calling for workers to be paid a livingPwage rather than the minimum, for the end of the gender pay gap, for the influence of the powerful with vested interests to be kept in check, and for the tax burden to be shifted away from labour and consumption and towards wealth and capital. Since the turn of the century, the world\’s bottom halfPhas receivedP1 per centPof the total increase in global wealth, while half of that increase has gone to the top 1 per cent, it also said. Oxfam referred to a Credit Suisse study that revealedP Pthan the rest of the world.
This occurredPa year earlier thanPpredicted. So much of the world remains relatively poor that it has taken a net worth of just US$4400 in 2015Pto be countedPamong the wealthiest half of all world citizens, the study found. The three richest men in the world Psoftware mogul Bill Gates, Mexican telecom magnate Carlos Slim Helu and investor Warren Buffett have a combinedPnet worth of US$230 billion, according to Forbes. In China, the richest 1 per cent of households own one-third of the country\’s wealth, while the bottom 25 per cent account for only 1 per cent, a new report by Peking University researchers showed. And inPBritain, new data revealed growing housePprices has led toPthe top 10 per cent now owning nearly half of the country\’s total private wealth. The International Monetary Fund last year warnedPthe gap between rich and poor in advanced economies wasP, making widening income inequality the \”defining challenge of our time\” andPsuggestingP\”the benefits do not trickle down\”. – SMH