Current cost of living pressures tip of the iceberg, with consumer savings levels critically low, shows TISA research
- TISA and Appinio conducted a survey of the financial position of 2000 weighted respondents ahead of the increase in the energy price cap
- 54.7% reported dipping into savings to supplement their disposable income before the latest energy price cap increase
- The survey showed most consumers have insufficient levels of savings, with nearly 20% down to less than £1,000 in cash assets
- The report also found consumers are deprioritising or even wholly unaware of their long-term pension savings, including widespread lack of awareness of pensions auto-enrolment.
Research conducted by The Investing and Saving Alliance (TISA) and Appinio demonstrates how an underlying savings crisis threatens to compound cost of living pressures.
Responses from a proportionally representative sample of 2,000 people found that over 75% of respondents are managing their own finances, with 62% having a long- or short-term savings account. Over 50% of the respondents have to rely on their savings to supplement their disposable income.
Further, of those who did have savings accounts, the largest group of consumers (over a fifth) had less than £1,000 saved. These numbers will inevitably be exacerbated further by the cost of living crisis and impending energy price rises, resulting potentially in big sacrifices being made to living standards or taking on additional or new debt. For those over 55, this squeeze could also result in them accessing any pension wealth earlier or withdrawing larger amounts than expected, without taking into account the impact this will have further down the line.
Long-term savings and pensions are also desperately low, with a plurality (over a third) of respondents unaware of auto enrolment pension schemes and a similar number reporting not being a member of an auto enrolment scheme.
One final finding revealed a clear lack of financial education for the majority of respondents. An overwhelming 68% of those surveyed disagreed with the statement ‘I feel school prepared me for my financial life’. There is a clear opportunity for the UK’s education system to pass on important financial education and life skills to children which would help build understanding around the importance of saving and financial resilience.
TISA therefore calls on the government to make financial planning a key part of the educational curriculum to prevent further savings crises.
Renny Biggins, Head of Retirement at TISA, said: “We would first like to thank Appinio for this collaboration, which has provided valuable –insights into the savings habits and challenges that consumers across the UK are facing. It is clear from the data that large sections of society lack the short-term financial resilience needed to meet unexpected emergencies.
The current cost of living crisis is having a profound impact on all but the most wealthy UK consumers. Along with the need for some tough decisions and sacrifices, for many this will also result in taking on or increasing personal debt and/or tapping into pension wealth.
Whilst the government will need to introduce some short-term fire fighting measures to help the most vulnerable consumers through the current crisis, in the longer term it is important that a comprehensive savings and guidance framework is put in place to equip consumers with the knowledge, confidence and ability to increase their levels of resilience.”
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Notes to Editors
The Investing and Saving Alliance (TISA) is a unique, rapidly growing membership organisation for UK financial services.
Our ambition is to improve the financial wellbeing of all UK consumers. We do this by focusing the convening the power of our broad industry membership base around the key issues to deliver practical solutionsand devise innovative, evidence-based strategic proposals for government, policy makers and regulators that address major consumer issues.
TISA membership is representative of all sectors of the financial services industry. We have over 200-member firms involved in the supply and distribution of savings, investment products and associated services, including the UK’s major investment managers, retail banks, online platforms, insurance companies, pension providers, distributors, building societies, wealth managers, third party administrators, Fintech businesses, financial consultants, financial advisers, industry infrastructure providers and stockbrokers.
As consumers, the financial services industry and the economy react to and recover from the effects of the pandemic, the importance of the three key pillars of work that TISA prioritises has never been more apparent:
- Strategic policy initiatives that influence policymakers regarding the financial wellbeing of UK consumers & thereby enhancing the environment within which the industry operates in the key areas of consumer guidance, retirement planning, later lifetime lending, vulnerable customers, financial education, savings and investments.
- TISA is recognised for the expert technical support provided to members on a range of operational and regulatory issues targeted at improving infrastructure and processes, establishing standards of good practice and the interpretation and implementation of new rules and regulations covering MiFID II, CASS, ESG/RSI, operational resilience, Cyber Risk, SM&CR and a range of other areas.
- Digital transformation initiatives that are driving ground-breaking innovation and the development of industry infrastructure for greater operational effectiveness and revenue promoting opportunity for firms. TISA has become a major industry delivery organisation for consumer focused, digital industry infrastructure initiatives – TISAtech (a digital marketplace that brings together financial institutions and FinTechs for greater collaboration and innovation) and TURN (TISA Universal Reporting Network – a digital platform providing a secure data exchange for financial services using blockchain technology) – alongside projects Digital ID and Open Savings & Investment. This reflects TISA’s commitment to open standards and independent governance.