SINGAPORE, Feb 10 — In a landmark report, Singapore’s Ministry of Finance (MOF) has unveiled the nation’s first official measure of wealth inequality, revealing a more pronounced disparity in wealth than in income. The report also indicates a concerning trend of slowing social mobility.

According to The Straits Times, in the report the key metric, the Gini coefficient for wealth, is estimated at 0.55. This is significantly higher than the Gini coefficient for income, which stands at 0.38 after government taxes and transfers. A coefficient of 0 represents perfect equality, while 1 indicates maximum inequality.

Wealth inequality measures the distribution of a population’s total assets (like property, stocks, and savings) minus liabilities (like mortgages), offering a broader view of economic disparity than income alone.

At 0.55, Singapore’s wealth inequality is comparable to countries like the UK, Japan, and Germany, where estimates range between 0.6 and 0.7. However, MOF cautions that direct cross-country comparisons are complex due to differing data collection methods.

The ministry explicitly notes that wealth inequality figures, both in Singapore and globally, are “likely to be underestimated.”

Tracking and valuing assets such as private equity and overseas holdings is notoriously difficult, and financial confidentiality often limits data collection, leading to under-reporting at the wealthiest end of the spectrum.

Singapore’s wealth estimate is derived from the 2023 household expenditure survey, augmented by administrative data from CPF and property records.

The report highlights two dominant pillars of household wealth:

Home equity: The value of property after deducting mortgages constitutes over half of average household wealth across all income groups. Notably, even households in the bottom 20 per cent have positive home equity on average—a contrast to countries like the UK and Australia where the poorest households often have zero or negative equity.

CPF balances: Central Provident Fund savings make up approximately 22 per cent of wealth for all resident households.

MOF states that these policies have resulted in “a very small share of the population with negative wealth.”

Experts cited in the paper warn that wealth inequality fundamentally shapes life trajectories.

“Parents with more assets can invest more in children and buffer shocks, which allows them to reproduce mobility in subsequent generations,” said Mathew Mathews of the Institute of Policy Studies.

The data shows a deceleration in relative social mobility. MOF analysed different birth cohorts and found a rising proportion of children from the poorest households remaining in the lowest income bracket as adults. For children born between 1985-1989, 25.3 per cent stayed in the same low-income station as their fathers, up from 24.2 per cent for those born in 1978-1982.

Dr. Mathews observed that as the economy matures, family background becomes "more influential over time",highlighting the risk that wealth and income gaps compound across generations.

The MOF paper concludes by acknowledging that wealth can become entrenched.

It asserts that Singapore’s policies—specifically through HDB housing and the CPF system—are deliberately “tilted towards those with fewer resources” and have played a crucial role in moderating wealth inequality and fostering broad-based asset ownership.