View all newsletters
Sign up to our newsletters

Support 110 years of independent journalism.

  1. Business
  2. Economics
27 February 2013updated 26 Sep 2015 3:01pm

Why don’t we save? Because we don’t have the money

The biggest reason for a failure to contribute to pension plans is not having the money to do so.

By Alex Hern

Aviva, the insurance firm, has released its second Working Lives report, analysing the sort of benefits businesses give their employees. One particular passage jumped out at me:

Almost half (45%) of employees who do not contribute to a scheme they are offered say they simply cannot afford it, 19% are repaying debts and 17% are saving for other things. Of interest, the number of workers who say they cannot afford to pay into a scheme has dropped 10 percentage points from 55% (Q2 2012) which suggests that while general finances remain tight, retirement saving is becoming more of a consideration.

The problem that Britons don’t save for retirement plagues public policy, and novel solutions are forever being proposed. For instance, one of the responses to this report, from ILC-UK, called for Government and the pensions industry to “work together to develop and promote a savings rule of thumb similar to the ‘5-a-day’ healthy eating message.”

But if Government needs to do one thing to boost the number of Brits saving for retirement, it’s pretty clear that that one thing ought to be aiming to increase the incomes — or at least, the disposable income — of the poorest 45 per cent of the country. It’s not a lack of responsibility that prevents them saving, it’s a simple lack of funds.

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

(It’s similarly not a lack of responsibility that a 19 per cent of employees decide to pay off debts rather than save in a pension; saving when you have interest-bearing debts is, as a rule of thumb, a stupid thing to do)

Those figures also only count for employees with a workplace pension scheme, an increasingly rare situation to be in. Such schemes typically involve employer matching of contributions, which makes it even more critical that employees feel they can afford to actually take the employer up on the offer. As with other in-kind compensation like healthcare or company cars, such benefits are usually a way for an employer to “top up” an otherwise-low salary. If it is disproportionately poorer employees aren’t making the most of them, that hurts them twice over.

Of course, whether employees think they can afford to contribute into pensions is different from whether they can actually afford to. It may be that if the urgency of saving for retirement were properly impressed upon employees, they would be able to make savings in their daily lives elsewhere. But that’s a very different proposition from merely reminding people that they ought to be saving more.

Content from our partners
The promise of prevention
How Labour hopes to make the UK a leader in green energy
Is now the time to rethink health and care for older people? With Age UK

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU