The emerging savings crisis: government failing the savings test

The emerging savings crisis: Government

Budget discussions around pensions underestimated the savings gap. "It’s a full-blown crisis which requires long-term policy making" says KPMG's Andy Masters.

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Despite the wealth of analysis on pensions and savings in the run-up to the Budget, discussions sidestepped the basic problem: people aren’t saving enough and no policy currently being discussed is likely to address this crisis:

Andy Masters, KPMG’s Head of Savings and Wealth discusses how “flexibility” and “freedom” are leading us to lose sight of the purpose of pensions and the cultural shift which must partly be driven by Government, with clearer pensions and tax incentives, to get society back on track.

This is not a savings gap. It’s a savings crisis

  • Inadequate saving will lead to a progressive deterioration in the retirement people can look forward to.
  • According to the DWP, 7 in 10 households have savings of less that £10,000 and just half have less than £1,000. 

The Budget was a missed opportunity

  • The Budget could have given us a significant step towards a stable policy framework to encouraging saving. 
  • The Lifetime ISA (LISA) has been introduced in an already complex environment. Phase one of auto enrolment does not finish for two years yet, and there is widespread concern that LISA will detract from the early success of this key building block of the future savings landscape.  

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