Our discussion paper builds on our earlier work to show, via new research, which families in the UK are least likely to have saved enough for a rainy day and offer options for how the pension auto-enrolment scheme could be adapted to deliver £1,000 savings for these families and others.
We also call on financial services firms to consider products to enable low-to-moderate income families to save, and suggest how the welfare system could be evolved to include a savings element.
The savings crisis in the UK
Our latest research research shows that:
- People on low-to-moderate incomes, people in rented accommodation and people with younger children are least likely to have £1,000 in precautionary savings
- Economic influences such as low income and high outgoings are factors which preventsmany families from saving
- Behavioural barriers such as bounded rationality, inertia and procrastination also prevent saving
The policy challenge is to get families saving by helping them overcome the economic and behavioural barriers which are currently preventing them from saving.
We want to see an improvement in financial resilience and a reduction in the level of problem debt in Britain. That's why we believe all families should have a minimum of £1,000 saved to help them cope during a 'rainy day'.
Incentives such as auto-enrolment, matched funding and prize-links have been used successfully in the UK and other countries to get families saving. We must use these incentives again to solve the savings crisis.