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Press releaseNS&I’s QUARTERLY SAVINGS SURVEY: SPRING 200501 June 2005Savings down as the ‘Reality Gap’ widensBrits need to recognise saving is the smarter way to enjoy lifeThe third quarterly analysis of the way British people save and invest will be published on 01 June 2005 by National Savings and Investments (NS&I). The NS&I Spring Savings Survey reveals that savings have dipped in Britain over the last quarter. The percentage of income saved across the nation hit its lowest point since the survey began in autumn 2004 as savers only managed to put away 5.82% of their salary each month and the number of people saving regularly fell below half the population (48%) for the first time. Spring’s figures are considerable down on the previous six months. 56% of the population saved regularly in winter and 54% saved regularly in autumn 2004. The percentage of income saved is 1% lower than winter (6.90%) and autumn (6.70%). Despite this decline in actual savings, the amount people would like to save has increased slightly, producing a widening ‘reality gap’. In spring, people revealed that they would like to save 14.63% of their income but only managed to save 5.82% – a reality gap of 8.81%. This is an increase from winter (7.59%) and autumn (7.65%). Dax Harkins, senior savings strategist at NS&I, commented: “This growing gap between intentions and actual savings habits is a real concern. Although high savings targets are to be encouraged we need to ensure actual savings are rising to meet them rather than slipping away. “As an industry we need to ramp up efforts to enhance the savings culture and encourage people that saving is a smarter way to enjoy life.” This worrying trend is apparent across all groups surveyed with the Young and Determined Savers (16-24 year olds) experiencing the greatest widening gulf. They continue to out-save all other groups, putting away 8.06% of their income each month but their goals are even higher at 21.95%. This has created a shortfall or reality gap of 13.89% - a gap which has increased from 10.80% in winter and 8.88% in autumn. Women are more likely to fall short of their savings goals than men with a 10.02% reality gap (8.70% in winter) compared to 7.86% for men (6.78% in winter). Singletons also have difficulties hitting their savings goals and have a gap of 11.45% (9.09% in winter), which is significantly higher than married people (7.79% in spring compared to 6.76% in winter) and widowed, separated or divorced people (9.03% in spring compared to 8.24% in winter). The NS&I Savings Spring Survey includes research undertaken between March and May 2005 and examines savings patterns during the quarter, as well as likely savings patterns in the next quarter. KEY HIGHLIGHTS SAVINGS TRACKER: How have Brits been saving over the past three months?
PROPENSITY TO SAVE: How will Brits save in the next three months (June – August 2005)?
HOUSING: (See separate NS&I release*)
SAVINGS COMPARATOR: rate trends
NS&I’s view Dax Harkins, senior savings strategist at NS&I, commented: “The Spring Saving Survey has highlighted the widening ‘reality gap’ between what people intend to save and what they actually saved. We feel that this gap can be blamed on the ‘Sunday night’ syndrome, when we promise to lead a healthier life starting Monday but by Tuesday motivation fades and the detox and gym sessions fall by the wayside. “YADs have the greatest expanding ‘reality gap’ (13.89%) of all groups which may be due to their relative financial inexperience while those in full time employment have the smallest (6.79%). However, YADs saved the highest percentage of income across all age groups so while you need to be realistic about what you can save, having high goals can push you to save more. “The good news is increasing savings targets suggest messages about spiralling debt and the lack of savings, especially for retirement, are starting to get through to people, however, we are seeing behaviour lag behind. As an industry we need to find ways to make those Sunday night intentions last the whole week.” ENDS Notes to Editors
Dax Harkins is available for interview and high-resolution photographs can be supplied. Contact the media team to arrange an interview or request photographs by e-mail.
Appendix THE SAVINGS TRACKER IN DETAIL Fewer people saving The proportion of regular savers decreased from 56% in winter to 48% in spring. This fall was in sharp contrast to the winter surveys propensity to save, which showed that people believed they were more like to save over this quarter (+9). However, the average amount saved per month by regular savers remained stable; spring (£159.26), winter (£158.73). The amount saved as a percentage of income also fell to 5.82% in spring from 6.90% in winter. This is suggests that the savings ‘reality gap’ is widening. But it pays to be married or cohabiting In spring, more married or cohabiting people (52%) saved regularly than single (43%) or widowed, divorced or separated people (46%). Although singles save the most as a percentage of average income, married or cohabiting people are the most consistent savers (see figure one below). Married or cohabiting people also save the highest mean amount (£178.44) out of the three groups by a considerable margin – single (£136.09) and widowed, divorced or separated (£129.66). This is probably due to having a higher average income but may also reflect more financial pressures such as the need to save for children, mortgages etc. However, while widowed, divorced or separated people have a lower number of regular savers than married or cohabiting people they are highly committed to the regular savings ethic. The proportion of widowed, divorced or separated regular savers only dropped by 3% from winter to spring compared to 8% for married or cohabiting and 10% for singles. Women vs men Spring saw the number of men who saved regularly fall sharply from 60% (winter) to 50% (spring). The number of female regular savers dropped from 52% to 47%. In addition, both sexes saw a fall in the amount saved as a percentage of average income; men saved 5.97% (7.26% in winter) and women saved 5.72% (6.58% in winter). The greater fall in the amount saved as a percentage of average income for men shows the relative volatility of their savings habits: 6.88% in autumn, 7.26% in winter and 5.97% in spring. Women, by contrast, have been more consistent in the amount saved as a percentage of average income: 6.58% (autumn), 6.58% (winter) and 5.72% (spring). Women also have a greater aspiration to save than men, looking to save 15.74% of their income compared to 13.83% for men. The best savers 16-24s or Young and Determined Savers (YADS) continued to be the UK’s most serious savers, putting away 8.06% of their income. This is considerably higher than the next two highest age groups for savings: 25-34s who saved 6.31% and 45-54s who saved 5.89%. Highest amount saved each month Of those saving regularly, 45-54s saved the greatest amount each month (£178.05) followed by the 25-34s (£173.82) and 35-44s (£165.18). This is a slight reversal of the figures in winter when 25-34s(£188.98) saved the most followed by 45-54s (£183.61) and 35-44s (£166.88). Social groups remain stable There was very little change in the number of regular savers in the socio-economic groups in spring with ABs (58%) on top and DEs (39%) at the bottom. Financially vulnerable strive to save While there are more full time workers (58%) who saved regularly than part time workers (54%), somewhat surprisingly part time workers saved more of their average income: 8.45% compared to 6.25%. This may be because they are aware of their financial vulnerability or possibly due to the fact that they are not the main breadwinners in their family group so can save more. Regions echo the national picture (see map in report + figure two below) The regional savings pattern echoed the overall findings of this report with the majority of regions reporting a fall in the number of regular savers. In the South East the number fell by 15% from 58% in winter to 43% in spring, while the East Midlands (47%) and the North West (53%) recorded the lowest fall of just 2%. Having had the second lowest number of regular savers in winter, Yorkshire and Humberside was the only region to record positive growth with the number of regular savers increasing 4% to 55%. Figure two: Regional Trends
SAVINGS PRODUCTS COMPARATOR A comparison of rates available across different products has shown that rates have fluctuated over the quarter despite the base rate remaining unchanged at 4.75% since August. While some top rates have dropped as offers come to an end, monthly income accounts, regular saving accounts and ISAs continue to produce headline-grabbing rates due to strong competition in the market. This should encourage vigilant savers to act now. PROPENSITY TO SAVE RESULTS IN DETAIL Data from the propensity to save tracker shows that people are less likely to save over the next three months with a negative net propensity to save of -1. This is down from winter (+9) although still above the autumn level (-8). Age The majority of age groups showed a negative propensity to save over the next three months. However, 16-24 year-olds continue to be the most positive age group with a +28% propensity to save. This is consistent with their autumn aspirations (+24%) but more realistic than the winter’s (+44%). Regions Only Wales (+8) and Yorkshire and Humberside (+7%) show a positive propensity to save. All other regions are less likely to save except for Scotland, which holds a neutral position. ENDS Further information from the Savings Survey Socio economic groups
Monthly savings increase
Current total savings The average amount held in savings, excluding pensions, was £15,514. The amount people think that they should have in savings is 63.86% higher at £25,421. 11% have no savings.
Small savers and super savers There has been a drop in both those saving modest amounts monthly and those who are saving significant sums. 16% of people are saving less than £99 per month (winter: 20%) and 7% of regular savers are saving over £300 per month (winter: 10%). Super savers - those saving over £300 per month
Small savers - those saving less than £99 per month
What are people saving for?
Savings as a percentage of income (Average saved per head / (mean income / 100) By age:
By socio-economic group:
By working status:
By marital status:
Media team The numbers below are for media use only. Customers wishing to contact NS&I can find details here.
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