Savings crusade has lost steam: StepChange

The senior public policy advocate at StepChange, a debt advice charity, said the current government believed it had “done” the savings agenda by extending the Isa allowance in this year’s Budget, despite uncertainty about whether tax-related incentives will raise savings levels among young people and lower income groups.

He said: “We do not necessarily believe that the changes to Isas will benefit those in lower income brackets and young people. Research indicates that these groups do not recognise tax incentives, which tend to appeal to those who are saving regularly and on top of their tax-free allowances.”

Speaking at the Personal Finance Education Group forum last week, Mr De Santos said that the charity was lobbying for policies that ‘nudge’ young workers into saving for more immediate goals than retirement.

He said: “The government does not realise that, while it is trying to encourage young people to save for a remote goal such as a comfortable retirement, many may find themselves in a cycle of debt if they do not have savings to meet a shortfall in income today, which could be caused by anything.”

Mr De Santos joined Paul Avis, marketing director for Canada Life, in calls for automatic enrolment to be extended to other products. Mr Avis has said he was determined to “get auto-enrolment for income protection on any party manifesto”.

Industry view

Jeffrey Mushens, technical director of the Tax Incentivised Savings Association, said: “It would be fairer to say that retirement is the priority for the coalition government and that any further changes to savings will not take place until after the general election. But all departments involved are definitely interested in the ‘nudge theory’ for non-retirement products and they are also engaging with the idea of universal child savings initiatives.”