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Brits save less over summer, prompting retirement poverty concerns

Brits save less over summer, prompting retirement poverty concerns
Date of Publication: Monday, 20 October 2014 15:12

The proportion of their income that Brits put away into savings accounts fell over the summer, according to new figures from the Treasury's savings arm.

 

British workers saved just 7.63% of their income during the summer months, according to the latest Quarterly Savings Survey from NS&I.

 

This represents a noticeable fall from 8.21% in the spring.

 

Young adults and pensioners were the only age groups to maintain their savings levels, with falls elsewhere across the board.

 

The survey also showed that men saved a greater proportion of their income than women over the summer - 7.89% compared to 7.34%.

 

This is a marked turnaround from the spring, when women were saving 8.59% compared to just 8.04% for men.

 

Altogether, the figures are a surprise, given the new ISA rules that were introduced in the summer.

 

As of 1 July, many of the restrictions placed upon cash ISAs were lifted, which was expected to signal a boom in tax-free saving.

 

However, persistent poor rates on savings accounts have dissuaded savers from moving their cash. Many have been happy to pick up better rates from their current accounts, which offer as much as 5%.

 

(Looking for an interest-paying account? See our recent feature: Where's best to switch to?)

 

Failing to Save for Retirement

But there is still concern that people are using low rates as an excuse not to save adequately for their retirement.

 

Millions of Brits will end up woefully short of the quality of life they want to lead, according to a study on the state of British financial health.

 

The average pension pot will be just over £120,000, it says, based on annual savings of just £2,762.

 

This grim picture was supported by NS&I, whose survey revealed that over a third of Brits (36%) have under £1,000 in savings, with 16% having nothing at all to fall back on.

 

With those aged between 35 and 54 the least likely to have any backup, it leaves a large proportion of the population in deep trouble ahead of their retirement.

 

“With Christmas on our doorstep, and an interest rate increase predicted for next year, it's essential we regularly review how much we can put aside in savings”, said Julian Hynd, the retail director at NS&I.

 

“It's also important to review now the personal impact interest rate rises may have, and if necessary take steps to make sure that an increase in payments, including mortgages, is affordable.”

 

 

Keith McDonald

Which4U Editor

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Monday, 20 October 2014 15:12
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