16 October 2018
- If given £25k to spend, 12% of Brits would keep the money in their current account, while only 5% would save into a pension
- 22% of Brits would use the money for a house, while 10% would save for a holiday
- 2% of 18-24 year olds would save into a pension, compared with 9% of 45-54 year olds, showing a markedly different generational attitude
Only 5% of Brits would put the majority of money into their pension pot if they were to receive a windfall of £25,000. Twice as many people (10%) would spend it on a holiday, while an even higher number (12%) would rather keep the majority in their bank account, effectively ‘doing nothing’, according to the latest research carried out by pensions consultants LCP and analysts, YouGov.
- Only a tiny proportion (2%) of 18-24 year olds would opt to save the majority into a pension, showing that financial education needs to target young people in particular.
- Those in the 45-54 age bracket were only marginally more likely to save into a pension, with 9% deciding that their pension is the best place for a spare £25,000.
- Almost a quarter of Brits adults (22%) would use the majority of a £25k tax-free windfall as money towards a property.
- If the average GB worker earning £27,000 a year had invested 3% of their salary each month over the last five years they would have saved up over £12,500, compared to £7,400 with the same amount invested in a stocks and shares ISA, according to calculations made by LCP.
This shows the British public have little comprehension around the benefits of investing in a pension rather than leaving it to linger in a current account.
Laura Myers, LCP Partner and Head of DC:
“These latest research findings highlight that there is a need for greater financial education in relation to saving for a comfortable future in retirement, which should be tailored to suit the different needs and personal circumstances of individuals.
“It may be surprising for many that their pension pot could actually earn more than an ISA, which is no doubt due to a lack of education around pensions and tax as well as a lack of engagement from savers with their pension and retirement options.”
“Making savings easy and accessible is the first step to engaging people – especially younger generations. The widely discussed Pensions Dashboard would be a great place to start – and is something that I hope the industry can work together to achieve.”
“Having personal savings information in one place on a Dashboard should help people to visualise savings in a more tangible way, and help move Britain away from being a ‘spend now, save later’ society.”
“Once people are engaged, continued education around the appropriate level to save, and how they should go about it, should be consistently communicated, so more people can achieve a comfortable retirement, rather than finding themselves with a pension pot that will only see them scraping by.”
About the survey
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2008 adults. Fieldwork was undertaken between 22nd - 23rd August 2018. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).