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Savings Metrics: Consumer Attitudes towards and Behaviour in the UK Savings Market Product Image

Savings Metrics: Consumer Attitudes towards and Behaviour in the UK Savings Market

  • Published: September 2007
  • Region: United Kingdom, Great Britain
  • 120 pages
  • Finaccord

Savings Metrics: Consumer Attitudes towards and Behaviour in the UK Savings Market is a publication offering a detailed and timely overview of a major tranche of the UK’s consumer financial services market, delivering in a single volume insight and analysis covering a broad range of savings products. These range from no notice interest-bearing deposit and savings accounts, cash ISAs and National Savings & Investments bonds and certificates to less commonly held short-term and medium-term savings options such as investment trusts and venture capital trusts, guaranteed equity or property bonds and tax-free friendly society savings plans. In addition, the study also examines consumer approaches to a variety of pension and retirement savings products. Moreover, not only does the report consider consumer usage of conventional retirement savings products, such as individual pensions and company or occupational pension schemes, but it also analyses the likely importance that they attach to other potential sources of retirement income, such as the property that they own, including second or holiday homes and property acquired for rental, or even, continuing part-time work following READ MORE >

0.0 EXECUTIVE SUMMARY
No notice interest-bearing deposit and savings accounts are held by over 50% of consumers
…. although a significant percentage have no short to medium-term savings whatsoever
…. with the proportion lacking pension or retirement savings increasing to almost twice this level
On average, a majority of the wealth of consumers in the UK is tied up in property ownership
Penetration rates for different savings products vary radically by demographic and life stage
Over a third of consumers claim to save in a disciplined manner and on a regular basis
… although only a minority appear to take any external advice when it comes to savings decisions
On-line financial aggregators and brokers are achieving an increasing profile among consumers
A clear majority of cons. agree that providing for retirement is an important motive for saving
… although many, especially those in younger age groups, face other more pressing priorities
Cons. display high levels of insecurity with regards to the adequacy of their retirement saving
… a degree of concern that diminishes only slightly among those aged between 55 and 64
7% of consumers believe that they will need savings in excess of £1 million in today’s money
Most consumers are not necessarily averse to the concept of compulsory retirement savings...
… although many appear to be pinning too much on the future value of their state pension
… and property ownership is beginning to rival conventional pensions as a retire. saving option
Consumers display a relatively high willingness to continue part-time work following retirement
The results of the research point to fast-changing consumer savings behaviour in the UK
… with increasing prop. to invest in property throwing up both challenges and opportunities

1.0 INTRODUCTION
Research rationale
The study offers unique data concerning penetration rates for 23 different savings products
… as well as analysing cons. propensity to acquire the products according to their life stage
… and delivering a number of original insights into their approach to retire. saving, in particular
Research sample1
Finaccord
Savings Metrics and other consumer-focused studies
UK affinity and partnership marketing publications
IPT / Tpoll

2.0 SAVINGS OVERVIEW
Introduction
Consumer holdings of residential mortgages and non-mortgage debt
Residential mortgages
Over one quarter of survey respondents own property outright with no outstanding mortgage
Among respondents with a mortgage, the average outstanding debit is in excess of £80,000
Non-mortgage debt
Just over a half of the 1,550 survey participants hold some form of non-mortgage debt
… with almost 20% of these burdened with unpaid loans in excess of £20,000
Consumer holdings of savings products
Short-term and medium-term savings products
Only three types of savings product are held by in excess of a quarter of consumers
… with the figures varying only a little when calculated on an adjusted basis
Over a quarter of respondents hold short-term and medium-term savings in excess of £20,000….
… with the average value of holdings growing in line with increasing age and household income
Pension and retirement savings products
Well over 40% of respondents belong either to a company or occupational pension scheme
Individual and group SIPPs, on the other hand, remain very much a niche market
44% of respondents state that they hold no funds whatsoever in pension or retirement products
… and a further significant percentage report savings of below £20,000 allocated to this category
Average retirement savings held by respondents aged between 55 and 64 are just £40,980
Number of relationships with companies offering savings products
Over 10% of respondents maintain relationships with five or more providers of savings products
Property ownership (including buy-to-let)
A small percentage of respondents own either a second home or property acquired for rental
25% of respondents own property with a gross value in excess of £300,000
Sources of information and advice influencing savings decisions
Consumer awareness of on-line financial aggregators and brokers continues to rise
Degree of self-direction when making savings decisions
A high proportion of respondents claim to be totally self-directed when it comes to savings
… although this percentage declines somewhat in line with increasing household income
Importance of general motives for saving
Well over a half of respondents agree on the importance of saving for retirement generally
… although those aged under 45, in particular, often have other more pressing needs for saving
Degree of discipline in consumer savings behaviour
Slightly over one third of consumers can be characterised as disciplined savers…
… although this percentage rises sharply for those with a household income of £50,000 or more

3.0 RETIREMENT SAVINGS
Introduction
Consumer confidence with respect to provision for retirement savings
Well over a half of consumers lack confidence that they will save enough for their retirement
… and uncertainty remains high even among respondents aged between 55 and 64
… although the outlook appears to be rosier for those with a household income above £40,000
Consumer perceptions of savings sufficient to provide for retirement
7.0% of consumers believe that they will need to save £1 million in advance of their retirement
… although the majority of consumers probably under-estimate the amount that they will need
The expectations of retired respondents are more modest than those of individuals still working
Attitudes of consumers towards idea of compulsory saving for retirement
A clear majority of consumers are open to the concept of compulsory retirement saving
Awareness of consumers of plans for a National Pension Savings Scheme
… although awareness levels of the government’s plans for the NPSS remain low
Importance of various income sources as a means of funding retirement
In general, consumer expectations of the state pension appear to be out of line with reality
Property owned ranks almost equally with financial products designed specifically for retirement
Consumers who have retired already appear to be even more reliant on the state pension
Younger consumers appear to be considering alternative means of retirement funding
Expectations of consumers with respect to their likely age of retirement
On average, the retirement age planned by consumers is not in line with government proposals
Willingness of consumers to continue part-time work following retirement
‘Work until you drop’ - a possible scenario for old age in the UK?
Consumer purchasing patterns for at-retirement products
Traditional pension annuities seem destined to remain the most popular at-retirement choice
Over two thirds of retired respondents are funding their retirement through a traditional annuity
Consumer holdings of products designed to minimize inheritance tax
A significant minority of respondents hold a product designed to minimize inheritance tax

4.0 SEGMENT ANALYSIS
Introduction
Short and medium-term savings products
Interest-bearing deposits or savings accounts for which no notice is required
Interest-bearing deposits or savings accounts for which notice is required
National Savings & Investments bonds or certificates (including premium bonds)
Cash ISAs
Equity ISAs
OEICs or unit trusts
Investment trusts or venture capital trusts
Direct stock market (equity) investment
Direct investment in corporate or government bonds
Bank and building society investment bonds
Guaranteed equity and property bonds (excluding NS&I)
Life company investment bonds
Life company endowment policies
Child Trust Funds
Tax-free friendly society savings plans
Pension and retirement savings products
Individual personal pensions
Individual stakeholder pensions
Individual SIPPs (self-invested personal pensions)
Group personal or executive pensions
Group stakeholder pensions
Group SIPPs (self-invested personal pensions)
Company and occupational pension schemes
Savings products designed to minimize inheritance tax

GRAPHICS / TABLES

Sample breakdown by age group, household income band and geographical location
Sample breakdown by number of children, employment status and retirement status
Home ownership and holdings of residential mortgage debt among consumers in the UK, 2007
Consumer holdings of residential mortgage debt in the UK split by value of outstanding debt, 2007
Holdings of non-mortgage debt among consumers in the UK, 2007
Consumer holdings of non-mortgage debt in the UK split by value of outstanding debt, 2007
Consumer holdings of short-term and medium-term savings products in the UK, 2007 (unadjusted)
Consumer holdings of short-term and medium-term savings products in the UK, 2007 (adjusted)
Consumer holdings of short-term and medium-term savings products in the UK split by value of savings, 2007
Cons. holdings of short and med.-term savings prods. split by value of savings, 2007 (seg. by age group - data)
Cons. holds. of short and med.-term savs. prods. split by value of savs., 2007 (seg. by house. inc. group - data)
Overall consumer holdings of pension and retirement savings products in the UK, 2007 (unadjusted)
Overall consumer holdings of pension and retirement savings products in the UK, 2007 (adjusted)
Consumer holdings of pension and retirement savings products in the UK split by value of savings, 2007
Cons. holdings of pens. and retirement savings prods. split by value of savings, 2007 (seg. by age group - data)
Cons. holds. of pens. and retirement savs. prods. split by value of savs., 2007 (seg. by house. inc. group - data)
Number of relationships with companies offering savings products held by consumers in the UK, 2007
Ownership of homes and other residential property (including buy-to-let) of consumers in the UK, 2007
Consumer ownership of property in the UK (including buy-to-let) segmented by value of property, 2007
Importance of sources of information and advice in influencing the savings decisions of cons. in the UK, 2007
Importance of sources of information and advice in influencing the savs. decs. of cons. in the UK, 2007 (data)
Degree of self-direction shown by consumers making more complicated savings decisions in the UK, 2007
Deg. of self-direction shown by cons. making savs. decs. in the UK, 2007 (segmentation by age group - data)
Deg. of s-d. shown by cons. making savs. decs. in the UK, 2007 (segmentation by house. inc. group - data)
Importance of general motives for saving of consumers in the UK, 2007
Importance of general motives for saving of consumers in the UK, 2007 (data)
Importance of general motives for saving of consumers in the UK, 2007 - answers for resps. aged under 45
Importance of general motives for saving of cons. in the UK, 2007- answers for resps. aged under 45 (data)
Degree of discipline shown in their savings behaviour by consumers in the UK, 2007
Degree of discipline shown in their savings behaviour by cons. in the UK, 2007 (segment. by age group - data)
Degree of disc. shown in their savs. behaviour by cons. in the UK, 2007 (segment. by house. inc. group - data)
Confidence of having saved sufficient funds to provide for retirement of consumers in the UK, 2007
Conf. of having saved suff. funds to provide for retire. of cons. in the UK, 2007 (segment. by age group - data)
Conf. of having saved suff. funds to prov. for retire. of cons. in UK, 2007 (segment. by house. inc. group - data)
Value of savs. perceived to be suff. by cons. to adequately fund retire., 2007 - answers for resps. not yet retired
Value of savs. perceived to be suff. by cons. to adequately fund retire., 2007 - answers for retired resps.
Attitudes towards idea of compulsory saving for retirement of consumers in the UK, 2007
Awareness of government plans for a National Pension Savings Scheme of consumers in the UK, 2007
Perceptions of cons. of various inc. sources as means of funding retire., 2007 - answers for resps. not yet retired
Perc. of cons. of various inc. sources as means of funding retire., 2007 - answers for resps. not yet retired (data)
Perceptions of cons. of various inc. sources as means of funding retire., 2007 - answers for retired resps.
Perc. of cons. of various inc. sources as means of funding retire., 2007 - answers for retired resps. (data)
Perceptions of cons. of various income sources as the most important means of funding retire. in the UK, 2007
Perc. of cons. of various inc. sources as the most important means of funding retire. in the UK, 2007 (data)
Expectations of consumers with respect to their likely age of retirement in the UK, 2007
Willingness of consumers to continue part-time work following retirement in the UK, 2007
Likelihood to purchase various at-retirement products of consumers in the UK, 2007
Likelihood to purchase various at-retirement products of consumers in the UK, 2007 (data)
Actual purchase of various at-retirement products of retired consumers in the UK, 2007
Consumer holdings of savings products designed to minimize inheritance tax in the UK, 2007
Interest-bearing deposit or savings accounts for which no notice is required: penetration by cust. segment, 2007
Interest-bearing deposit or savings accounts for which notice is required: penetration by cust. segment, 2007
National Savings & Investments bonds or certificates (inc. premium bonds): penetration by cust. seg. 2007
Cash ISAs: penetration by customer segment, 2007
Equity ISAs: penetration by customer segment, 2007
OEICs or unit trusts: penetration by customer segment, 2007
Investment trusts or venture capital trusts: penetration by customer segment, 2007
Direct stock market (equity) investment: penetration by customer segment, 2007
Direct investment in corporate or government bonds: penetration by customer segment, 2007
Bank or building society investment bonds: penetration by customer segment, 2007
Guaranteed equity or property bonds (excluding National Savings & Investments): pen. by cust. seg., 2007
Life company investment bonds: penetration by customer segment, 2007
Life company endowment policies: penetration by customer segment, 2007
Child Trust Funds: penetration by customer segment, 2007
Tax-free friendly society savings plans: penetration by customer segment, 2007
Individual personal pensions: penetration by customer segment, 2007
Individual stakeholder pensions: penetration by customer segment, 2007
Individual SIPPs (self-invested personal pensions): penetration by customer segment, 2007
Group personal or executive pensions: penetration by customer segment, 2007
Group stakeholder pensions: penetration by customer segment, 2007
Group SIPPs (self-invested personal pensions): penetration by customer segment, 2007
Company or occupational pension schemes: penetration by customer segment, 2007
Savings products designed to minimize inheritance tax: penetration by customer segment, 2007

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