In light of this week’s pension reforms, the vast majority of UK consumers are gradually progressing into a national savings and retirement crisis, unable to take advantage of the unparalleled financial freedom now available to retiree Britain. As revealed in research from Avacade Future Solutions, 89% of UK residents do not consider saving for their old-age as important; with more than 50% rather saving towards a holiday, or not at all. After the 2015 budget and the recent pension reforms, changes to kick-start the nation’s saving money and independent money management are the top priorities on the fiscal agenda. The motivation behind a lot of policy-backed pre-election announcements frames a depressing and hopeless outlook for tomorrow’s retirees, with one-tenth of pension planers stating that they believed they would never fully be able to retire.
89% of UK residents do not consider saving for their old-age as important; with more than 50% rather saving towards a holiday
The average UK household is expected to owe almost £10,000 by 2016, the reasons behind Britain’s poor savings performance are rife. Since the economic downturn, savers have struggled to beat inflation, escalating the challenge of funding a satisfactory retirement. The research has also exposed some interesting gender-based, age-based and regional differences between savings rates. Men and women possess different financial objectives with 12 per cent of men prioritising their retirement, compared to only 9 per cent of women. However, consumers are tackling increasing household debt, interest rates at an all-time low, and an overall consumer perception that saving is an immediate luxury as opposed to a long-term necessity.
- 89% of the UK population are not saving for their retirement as a priority
- 29% – equivalent to 14.6 million people – are currently failing to save any money at all according to nationally representative research
- Prioritising a holiday (23%) is twice as popular as saving for retirement (11%)
- Annual index launched in response to a Budget steered towards savings
- ONS reveals the savings ratio has dropped to 5.8% in the fourth quarter from 5.9% in the third quarter of 2014
There is a significant deviation between the saving rates across the UK. In the East of England, 35 per cent of the population are not saving at all compared to 23 per cent in London and 24 per cent in Northern Ireland. As a region, Northern Ireland is the most pension-conscious with one in five prioritising their retirement. Scotland and the East Midlands score 14 per cent in joint 2nd place.
The fact that 89% of the UK population are not prioritising their pension and that 14 million people in the UK are not saving at all calls for immediate industry action
Lee Lummis, Managing Director, Avacade Future Solutions, who commissioned the survey, said: “Taking a proactive approach to saving is vital for effectively achieving one’s financial objectives, especially retirement planning. The fact that 89% of the UK population are not prioritising their pension and that 14 million people in the UK are not saving at all calls for immediate industry action to prevent what could be the poorest generation of retirees in our lifetime. The Budget and the pension reforms that were announced in 2014/early 2015 have provided a valuable impetus to savers and pension planners, but education and support is now needed so that appropriate financial planning can happen. We believe the rest of the industry needs to recognise the number of people who are not saving and ensure they are given the tools to make effective financial decisions.”