Malcolm McLean comments on latest ONS figures which show that since 1997 the savings held by UK households have been significantly underestimated – possibly by as much as 3% to 6% a year.
According to this new, more accurate measurement of savings, last year’s recorded savings rate of just over 5% should have in reality have been between 8% and 11%. If this is correct it is extremely good news. In fact this new basis for calculating the rate would bring the UK savings patterns more in line with those of other more affluent countries such as Germany.
But we should not kid ourselves that the demographic time bomb is no longer ticking. We have an ageing society and this reassessment reflects the growing value of employer-provided pension schemes rather than people setting aside more cash. As such, much still depends on the continuing success of auto-enrolment into good workplace pensions and the level of pension contributions individuals are prepared to make into them in the future for their long term retirement planning.
“On the basis of the ONS figures, the pot of savings households will enjoy in retirement may be bigger in total than previously shown in the National Accounts, but it will still be down to individuals to secure their own financial futures, and we should continue to emphasise not underplay the importance of that.