More than 11 million working-age people in Britain do not have at least £1,000 in savings, according to a report from the Resolution Foundation. The thinktank warns that the cost of living crisis is hindering the poorest households from building financial resilience.
The report highlights a 'triple savings challenge' facing the UK: insufficient savings, inability to cope with major life events, and inadequate retirement incomes. It estimates that 11.2 million people live in households with savings under £1,000, representing about one in three working-age households. Half of these are in the poorest third of households.
The foundation, in partnership with the abrdn Financial Fairness Trust, calculates a £74bn shortfall in emergency and retirement savings compared to a scenario where every family has at least three months of income saved. Fewer than half of working-age households have such a buffer, leaving them vulnerable to unemployment or family breakdown.
Those with lower savings are more than twice as likely to rely on credit cards, overdrafts, or borrowing. The report urges the government to expand auto-enrolment into savings schemes, proposing a rise in contributions to 12%, split equally between employers and employees, with 2% directed to an easy-access 'sidecar savings' account of up to £1,000.
Molly Broome, an economist at the Resolution Foundation, said: 'We can address all three challenges by building on the success of pensions auto-enrolment to opt more people into both easy access and long-term saving.' A government spokesperson noted that auto-enrolment has helped nearly 11 million people save, and highlighted the Help to Save Scheme, which offers a 50% bonus on deposits of up to £50 per month.
