Marvin OnumonuThe Financial Conduct Authority (FCA) published its ‘Financial Lives Survey’ results which revealed one in 10 UK adults had no savings, and another 21% had less than £1,000 set aside.
Around 39% of adults held unsecured debts, with an average balance of £2,500.
One in four said they had missed payments, struggled to keep up with commitments, or did not have savings to manage in an emergency.
The survey also found a third of adults with a defined contribution (DC) pension had less than £10,000 saved, while 12% did not know how much they had in their pension pot.
Among people with more than £10,000 in investable assets, 61% kept at least three-quarters of their money in cash rather than investments.
Only a third of defined contribution pension holders said they had thought a lot about how they would manage in retirement, and almost four in 10 did not know how much they or their employer were contributing.
REACTION:
Sarah Coles, head of personal finance at Hargreaves Lansdown:
“Millions of people in the UK are running on empty – one in ten have no savings at all to fall back on and another one in five have less than £1,000.
“This may seem like a useful chunk of cash, but doesn’t go far if your car breaks down, the boiler stops functioning, or you lose work for a while. For one in four people, things have deteriorated even further, and their resilience is at rock bottom.
“When your finances are stretched, it’s incredibly difficult to build an emergency fund, but when you’re hit by the unexpected, you’ll be grateful for every penny you’ve managed to put aside.
“It’s a good idea to set up a direct debit to put whatever you can afford aside on payday. Even if this is a vanishingly small sum of cash, you can make a note to revisit it every few months to see whether you can afford to pay in any more.
“It’s particularly worth doing this after a pay rises, or during periods when you are working more hours.
“Over time, you’ll be surprised how even small chunks of cash can build, which will help protect you from nasty surprises.”
Steven Cameron, pensions director at Aegon UK:
“As always, the FCA’s Financial Lives survey provides a wealth of data on how individuals in the UK are managing their finances and where they’re receiving support.
“This year’s findings come shortly before a further consultation on how the proposed new targeted support service will operate for both pensions and investments.
“Both the FCA and the Government are keen for individuals with over £10,000 in investable assets to invest a larger portion of their cash.
“Targeted support could play a key role here, hopefully leading to greater returns for individuals as well as a boost to economic growth.
“Recent Aegon Second 50 research suggests there will be demand for targeted support. But alongside this ‘newcomer’, it’s important that the FCA continues to support a thriving advice channel.
“While the proportion of UK adults receiving advice in the most recently surveyed 12 month period has edged up to 8.6% from 8.3% in the 2022 survey, ideally this would be much higher.
“Enabling wider access to advice should be part of the FCA’s agenda to support the Government’s growth agenda.
“It will also be interesting to track how the introduction of targeted support impacts on the Government-sponsored MoneyHelper guidance service.
“It can only be positive for consumers to have access to both advice and a range of guidance services.”
Richard Lane, chief client officer at StepChange Debt Charity:
“When people find themselves facing an unexpected cost or emergency, having a savings buffer can be a lifeline that prevents an escalating debt crisis.
“For the significant minority of people who don’t, as the FCA figures show, they are left with difficult choices of turning to unaffordable borrowing or going without essentials.
“If people are forced to rely on credit to make ends meet when their finances are thrown off course, this can often draw them deeper into financial difficulty and problem debt.
“As evidenced by the FCA’s research, free debt advice and appropriate financial support can be invaluable in helping people to manage their debt problems and take back control of their finances.
“So it’s particularly important that firms are proactively signposting customers to debt advice at an early stage.
“It’s vital that the Government uses the upcoming Financial Inclusion Strategy to support more people to build financial resilience.
“We are calling on the Government to expand the Help to Save scheme and work with employers to expand workplace savings schemes.
“We also want to see the Government invest in safe options for those who can’t afford to save to cope with unexpected costs, including a permanent national crisis support scheme, building on the Household Support Fund and a national no-interest loan scheme, and by working with the financial services industry to expand affordable, low-cost credit.”
