Press Release

NS&I'S QUARTERLY SAVINGS SURVEY

9 December 2005

• Savings hit a high as consumers react to fears over debt
  
• 16-34 year olds save highest to date
  
• "Savings gap" between actual and target savings widens with age

A climate of lower UK consumer spending, and record levels of personal debt1 seem to have contributed to a peak in savings, according to the latest NS&I Quarterly Savings Survey.

Brits have saved the highest monthly amount (£174.43) and the highest percentage of their income (7.16%) in the past three months, since NS&I's authoritative Quarterly Saving Survey began in September 2004. This has coincided with a fall in spending on the high street suggesting a move away from a "spend, spend, spend" culture towards a "save, save, save" one.

	Autumn 2004	Winter 2004/5	Spring 2005	Summer 2005	Autumn 2005
Number of regular savers	54%	56%	48%	55%	55%
Percentage of monthly income saved	6.70%	6.90%	5.82%	6.64%	7.16%

The NS&I Autumn Saving Survey, covering the months of September, October and November, is the fifth issued since the Survey was launched in December 2004, and provides a detailed examination of UK consumers' savings patterns during the quarter as well as their likely savings patterns in the next quarter.

Key Highlights:

SAVINGS TRACKER: how have Brits been saving over the past three months?

• The percentage of income saved across the nation hit its highest point since the survey began in autumn 2004, as savers managed to put away over 7% of their monthly income for the first time (7.16% up from 6.70% last autumn and 6.64% in the summer quarter).
• The average amount saved per month also reached a record high of £174.43 (autumn 2004: £163.40, summer 2005: £158.26).
• Brits are looking to further improve on these figures as consumers revealed that their target savings were 14.75% of their income (autumn 2004: 14.35%) - another record.
• However, the number of regular savers in Britain remained stable at 55% of the population (autumn 2004: 54%, summer 2005: 55%). 
• The best savers were men, 16-24 year olds, C2s, and part-time workers, who all saved a higher percentage of their income than the British average.
• YADS (Young and Determined Savers) 16-34 year olds continued to lead the way as the nation's best and most disciplined savers. 16-24 year olds saved a record high of 12.62% of income - a record for all demographic groups since the survey began. The number of regular savers in this age group rose to 60%. 25-34 year olds saved 8.58% of income, a record for their age group, and 63% of this age group saved regularly.
• Older age groups suffering?  By contrast, savings levels amongst the older age groups were less impressive. The 55-64s saw the number of savers fall from 53% to 48% over the year and the number of over 65 regular savers fell from 42% to 41% - almost the lowest levels seen in the savings survey.
• "Savings gap" widens with age: Throughout the year all age groups wanted to save significantly more than they actually managed to. However the disparity widens with each age group. The over 65s having the widest "savings gap" of 8.98% between actual and target savings as a percentage of income.
• Men have continued to save more than women, as has been the case in every quarter to date, both in terms of the number of regular savers (57% in autumn 2005 compared to 52% of women and 59% vs 49% in autumn 2004) and the percentage of income saved (7.40% vs 6.85% in autumn 2005 and 6.88% vs 6.58% in autumn 2004).
• Top reasons for not saving more are not enough income (35%), too many demands on finances (24%) and not thinking that they need to save more (10%).

SAVINGS OUTLOOK:  How will Brits save going forward?

• Savings are set to increase in 2006 as the savings outlook (the percentage of people who are more likely to save, minus those who are less likely to save) is +18%.
• However, levels are likely to get worse before they get better. Brits predict a drop in the short-term as they battle seasonal expenditure, before raising their game in spring and summer. The Savings Outlook Index is -6% for the three months December - February.
• Most likely to save more: those aged 16-24 are most likely to save more over the next three month (+34%) and the Welsh are the most determined to increase contributions over the next year (+53%)
• Least likely to save more:  those aged 65+ are the least committed to saving more over the next three months (-25%) and people living in the South West are the least likely to save more over the next year (+2%)

SAVINGS COMPARATOR:

• In the summer, it seemed that providers had anticipated the base rate cut and already priced their products accordingly.  However, the autumn data reveals that this is not the case as providers continue to trim their rates. Seven out of the 11 product categories in NS&I's analysis have seen top rates fall by more than 0.25% in the last six months. Regular savings accounts have been hardest hit. (See separate release for full details).

NS&I's view

Dax Harkins, senior savings strategist at NS&I commented:

"It is extremely encouraging to see so many savings records being achieved. This confirms autumn as a good time to get serious about saving and together with the fact that the majority of people intend to save more over the next 12 months, shows that messages about the savings gap are getting through. Both factors indicate that people have begun to return to a more responsible attitude towards saving, as they see around them the harsh consequences of unmanageable debt.

"However, it is concerning to see that the number of regular savers has remained static at 55%.  A "savings gap" is emerging between those who are saving increasingly well, and those who are doing very little or nothing at all. Some of this may stem from the fact that record numbers of people are struggling with bankruptcy and personal debts2, but more needs to be done to encourage a greater number of people to save more and save regularly if we are to address this. This is a priority for NS&I."

OLDER AGE GROUPS SUFFERING

An analysis of the data illustrates that it becomes increasingly difficult to save as consumers become older, possibly due to the burden of their financial responsibilities. Those aged 45 and over were below the overall UK average for nearly all categories tracked by the Autumn Saving Survey including:

	UK Average	45-54	55-64s	65+
Number of regular savers	55%	62%	48%	41%
Average percentage of income saved	7.16%	6.47%	6.28%	5.25%
Target Savings as percentage of average income	14.75%	13.41%	14.67%	14.23%

The relatively small gap between the target savings for the older age groups and the national average showed that the saving intention is there, however actual savings continue to seriously lag behind. 

Dax Harkins, senior savings strategist at NS&I commented:

"The poor savings performance amongst older age groups is a worrying trend. Whilst it is understandable that lifestyle factors such as children or mortgage costs will impact on the ability to save, all age groups must be proactive about this in order to address the savings gap."

THE YOUNG STILL BRITAIN'S BEST SAVERS

16-24s or Young and Determined Savers (YADS) achieved another record this quarter maintaining their position as Britain's best savers. YADS saved the highest percentage of their income in any category in all Savings Surveys to date - 12.62% (previous record - summer survey:  10.11%). YADS also showed a rise in the number of regular savers to a record 60%.

Autumn was also a good saving season for those aged 25-35 who put aside the highest mean amount by those saving regularly (£193.64) across all age groups.  The number of regular savers also increased marginally from 61% (autumn 2004) to 63% (autumn 2005) - a record for this age group and the largest number of regular savers across all age groups.

Dax Harkins, senior savings strategist at NS&I commented:

"The consistently strong performance of YADS is a really positive sign for the future. Their clear savings goals undoubtedly contribute to this performance and we hope that these YADS will continue their good savings habits in later life when goals such as saving for retirement are less tangible."

TARGET SAVINGS VS. REALITY: THE "SAVINGS GAP" WIDENS WITH AGE 

Despite having higher goals, younger savers appear to be much closer to achieving their savings targets than older people. The gap between target and actual savings as a percentage of income widens considerably as you move up the age groups.

The table below shows how far off target savings levels the various age groups were this quarter:

Age group	Actual Savings	Target Savings	Difference	Percentage difference
16-24s	12.62%	19.72%	7.10%	+56.26%
25-34s	8.58%	15.69%	7.11%	+82.87%
35-44s	6.28%	12.62%	6.34%	+100.96%
45-54s	6.47%	13.41%	6.94%	+107.26%
55-64s	6.28%	14.67%	8.39%	+133.60%
65+	5.25%	14.23%	8.98%	+171.05%

Whilst the younger age groups continue to demonstrate good savings habits, it appears the increasing responsibilities of later life such as mortgage payments or children mean that despite increasing earnings, the percentage of income saved drops significantly as we move up the age groups. 

REGIONAL REVIEW

The Welsh were this quarter's best savers, saving 8.97% of their income on average. The number of regular savers in Wales was also up on this time last year from 64% to 67% - the highest number of all the regions. The worst savers were those in the South East who only managed to save 5.97% of their income and also had the lowest number of regular savers - just 48%. This is down on last year when 52% were putting away an average 6.15%

WHY PEOPLE DON'T SAVE MORE

A lack of spare income is the top reason given for not saving more. However almost one in five people don't save more because they either don't think that they need to or would rather "live for the moment" than save.

"Which of the following stops you from saving more than you do?"
Not enough income	35%
Too many demands on my finances	24%
I don't think I need to save more	10%
Rather live for the moment than save	9%
Cost of paying off debts	6%
Interest rates aren't effective enough	4%
No time to explore all the options	1%
Not sure what the best ways to save are	1%
Lack of trust in the industry	1%
Put off by bad advice	1%