The government is facing unprecedented pressure to introduce policies to tackle an “impending consumer finance crisis” as more than 50 financial services firms come together to warn of the need to introduce policies to boost saving.
Intrinsic, SimplyBiz and Axa Wealth are among 22 firms that have formed The Savings and Investments Policy, a collaboration designed to reverse a credit-fuelled spending culture. The project is also supported by a further 30 companies, trade bodies and consumer groups.
A report produced by the group today (28 April) states a lack of savings is threatening people’s financial security and will force more into hardship and debt, with the tipping point set to be in 2035 when those entering retirement will be increasingly less-well-off than earlier generations.
The group has also written an open letter to the government in which it argues people are failing to save enough for day-to-day needs, as well as falling short in putting aside funds for their retirement.
As a result, people will face substantially reduced living standards for the remainder of their retired lives, they say. The group believes this is a “once-in-a-generation” opportunity to change people’s attitudes to saving.
Among the signatories on the letter are: BlackRock, Fidelity, Henderson, Threadneedle, Zurich, Aviva, L&G, AXA Wealth, Old Mutual, Nationwide, Northern Trust, NatWest, Intrinsic, Simply Biz, Charles Stanley, Pinsent Masons, JP Morgan, Bank of New York Mellon, Citi and Lloyds.
The project, which is being managed by the Tax Incentivised Savings Association, will develop strategic proposals for new savings and investments policies to help rebuild consumer confidence and trust in long term savings.
Its findings, conclusions and recommendations will be used to work with government, key political parties, consumer groups and regulators to present a consistent view.
The project seeks to develop strategic proposals on how to enhance consumer financial well-being and will be ready to share these across the political parties by September 2014.
Tony Stenning, chairman of TSIP project and head of UK Retail at BlackRock, said: “Today’s pensioners are benefiting from the ingrained savings habits and more generous pensions of the past – but the future is going to be different.
“Over the past 25 years both the State and employers have had to significantly reduce the levels of income that people can expect in retirement. This means people need to save more just to maintain the same standard of living as their parents, meanwhile given increasing longevity their retirement pot will also have to work much harder to support their longer lives.
“The generations impacted most are those aged 35 or younger as they face rising housing costs, less generous pensions and are saving less. If nothing changes are they destined to benefit from longer, healthier lives, yet suffer financial hardship in old age?”