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New ABI research highlights need for measures to help savers

The need to kick-start the attractiveness of saving is reinforced by research published today by the ABI (Association of British Insurers).

The ABI's Savings and Protection survey for the first quarter of 2009 shows that:

- Nearly two thirds of people expect the economy to deteriorate further during 2009. This is a slight improvement on the number who felt the same in the last quarter of 2008.

- The lack of retirement provision continues to be a serious problem. Approaching half - 42% - of the UK workforce face financial problems in retirement. Some 13% of people are currently saving at levels unlikely to provide an adequate income, while an alarming 30% are saving nothing for their retirement.

- Property is regarded as the best long-term investment, with 45% of people choosing this as their preferred investment. Low interest rates and uncertain investment conditions continue to make savings accounts and equities unpopular.

Dr Rebecca Driver, the ABI's Director of Research and Chief Economist, said:

"Although consumers remain pessimistic overall, there has been as an improvement in sentiment over the last quarter, with fewer people predicting the economy will worsen a lot. At the same time the number of people who see property as the best long-term investment has risen by 5 percentage points. It is good news that the economy seems set to rebound, and helpful that the current crisis has also led to a shift in consumer attitudes to finance. Falls in mortgage rates, and worries over job security, mean that 25% of people now say that they are either paying off their mortgages at a faster rate than before, or starting to do so, up from 16% last quarter. Similarly the proportion of those paying off non-mortgage debt more rapidly has increased to 28%.

"The economy needs to rebalance if it is to return to sustainable growth in future, so this shift in attitudes to debt is helpful. However, achieving this will also involve encouraging households to make a conscious decision to increase long-term savings and the forthcoming Budget is one opportunity to do so. That is why the ABI is calling for an increase in the equity ISA limit to £10,800, and allowing employers to automatically enrol employees into workplace pensions before 2012. Over the next few months the ABI will be unveiling further proposals to boost the popularity of saving."

Last updated 01/07/2016