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Survey says savings gap is exaggerated

Warnings of a savings and pension crisis may be greatly exaggerated, according to new research from the International Longevity Centre-UK.

ILC-UK says the savings gap of £27bn is less than the amount passed on each year in inheritance.

The research questions Government figures for unsecured debt, saying they may be too high as they include significant amounts of credit card debt which is paid off in full each month.

The research, compiled by The Future Foundation, shows that individuals&#39 financial planning is much more sensible than generally perceived. It says that although consumer debt has reached 120 per cent of annual post-tax income – an all-time high – the value of assets held by individuals and families is also at an all-time high.

The research suggests that a real savings crisis could occur in around 40 years.It reveals that people under 50 hold three-quarters of all debt while people over 50 hold 70 per cent of net wealth.

The research also reveals that fewer and fewer under35s are paying into private pensions and ILC-UK points out that this situation will not be helped by higher student debts.

Future Foundation co-founder Michael Willmott says: “This study raises the question of whether the most significant savings crisis, if it is to occur, will be in 40 years time rather than now, when today&#39s 20-somethings start considering retirement.”

Director Richard Marriott says: “This report has significant messages both for the Government, as they consider the importance of people&#39s financial assets other than pensions, and for the financial services industry, for whom the potential for properly regulated equity-release schemes aimed at older people must be huge.”

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