This, despite the fact that Britons are putting away more money during 2014 than at any time in the last decade.
Speaking at the launch of the report, Hutton said: “The Government has gone some of the way – but they need to do more to foster a dramatically different savings culture. Having a national savings target will help drive the future pension reform agenda.
“Given the accelerating patterns of demographic changes underway in society, with people living substantially longer periods in retirement, household saving and wealth holding must be a major public policy priority.
Part of the problem is that, while the population is indeed saving more, evidenced by the latest data from NS&I Quarterly Savings Survey, the majority of people (74%) are putting money aside without a goal in mind.
And, of the remaining 26%, 42% were looking forward to a holiday or celebrating a special occasion while 35% said they were saving to cover housing costs which includes saving for a deposit, the survey reported.
Another part of the problem is evidenced by data from Nutmeg, which demonstrates that 52% of UK adults hold a cash ISA, and only 17% a stocks and shares ISA.
“The reasons so many ISA investors persist in sticking to cash are varied, but the overriding factor for cash-only ISA holders is to avoid exposure to risk (37%). Unsurprisingly, this is particularly the case among the over 55’s, with just under half (45%) stating this was behind their choice to stay clear of stocks and shares,” Nutmeg said.
This lack of appropriate saving comes during the ongoing, rapid shift from defined benefit to defined contribution schemes.
And as Hutton pointed out: “The demise of Defined Benefit (DB) schemes saw a dramatic fall in the numbers saving in occupational pension schemes in the private sector, with only around 35% of employees saving in such a scheme.”
And, on average people pay around half as much into DC as DB schemes.
“A third of UK households have little or no savings at all. A further 14% have savings of less than £1500. Nearly half of all UK households are unprepared for the imminent demographic changes. Retirement saving is as – if not more – fundamental now than at any other time in history,” he added.
