The data reveals 89 per cent of the population do not consider saving for their old-age as important; with more than 50 per cent rather saving towards a holiday, or not at all.
In the wake of the 2015 budget, announcements to kick-start the nation’s saving funds were the top priority on the fiscal agenda. The motivation behind a flurry of policy-backed pre-election announcements frames a bleak outlook for tomorrow’s retirees.
With the average UK household 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, intensifying the challenge of funding a satisfactory retirement.
Furthermore, in a recent HSBC study of the UK’s sentiments towards retirement, 52 per cent said their savings were not keeping pace with the rising cost of living, with one-third considering their mortgage as a key barrier to saving.
The research has also unveiled 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.
There is a significant divergence 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.
As announced by the Office for National Statistics, the UK’s GDP per head remains 1.2 per cent below pre-economic downturn levels, with net national disposable income remaining 5.1 per cent below pre-downturn levels. In short, Britain is experiencing the slowest recovery in a century, with households dipping into savings to fuel spending, spurring the savings ratio to drop to 5.8 per cent in the fourth quarter from 5.9 per cent in the third quarter.
As part of a global comparison, personal savings in the United Kingdom is considerably lower than its global counter-parts, compared with 13 per cent across the Eurozone, 21 per cent in Japan and 10 per cent in Germany.
However, consumers are tackling burgeoning 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.
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.”