CCR Magazine

You are here  :Home arrow News arrow Adapting auto-enrolment to fix savings crisis
Contact Us Newsletter Signup RSS Feeds

Latest News Headlines


Commercial Credit News


Adapting auto-enrolment to fix savings crisis PDF Print E-mail
Thursday, 06 August 2015

A radical adaptation of the pensions auto-enrolment system in conjunction with prize based incentives would help address the problem of low savings rates in the UK and protect people from financial hardship, according to a new discussion paper released today by StepChange Debt Charity.

The proposals come after a YouGov poll commissioned by the charity revealed 21.8m British adults are not confident they are saving enough to cope with a rainy day. At the moment these people don’t see how they are going to be able to start saving either; 75% (16.3m) aren’t confident they will be able to start saving enough for a rainy day within the next year.

Previous research by the charity showed that accessible cash savings of £1,000 would protect 500,000 households from falling into problem debt and make a dent in the £8.3 billion social cost of problem debt. Yet StepChange’s analysis of the Wealth and Assets Survey revealed a worrying £5.3bn savings gap with more than 7 million households falling well short of this minimum £1,000.

The charity argues that adapting the pensions auto enrolment system, one of seven key proposals in the charity’s new report, will create a vital safety net for non-savers.

Who’s not saving?

The charity’s research revealed that people on low-to-middle incomes, people in rented accommodation and people with young children are least likely to have £1,000 in precautionary savings. This group represents over 25% of the population.

Why aren’t people saving?

Aside from income, housing tenure and the presence of young children, the analysis shows that behavioural traits impact on an individual’s saving. A significant proportion of households (between 8% and 13%) tend to be less organised with their money or engage with behaviour that does not prioritise long term financial advantage [4].

Using auto-enrolment to help people to save

StepChange Debt Charity argues its auto enrolment savings scheme proposal, which could be established by creating an accessible savings ‘jar’ within a pension pot or diverting auto-enrolment contributions into a linked savings account, would help families overcome low income and behavioural traits as barriers to saving.

Mike O’Connor, Chief Executive of StepChange Debt Charity, said:

“Our research highlights a national savings crisis with far too many families living without a financial safety net and at real risk of problem debt. Adapting the existing approach to pension saving would ensure each adult is better able to cope with an unexpected bill and a loss of income without sinking into debt.

“We have a successful strategy in this country to boost retirement saving. We have successful strategies to encourage saving if you’re reasonably well-off, retired or saving for the deposit on a house. But we have a gap when it comes to encouraging hard working people on tight budgets to start saving.”

(Source - StepChange Debt Charity Press Release)


latest issue

CCR Cover

The latest edition of CCR Magazine, the leading editorial publication in the UK credit industry, is out.

Read the latest issue online


CCR is the premier magazine for consumer and credit professionals. It provides an independent voice to the industry, breaking major news stories and running in-depth features.

As a magazine, it works with and campaigns on behalf of the credit industry to promote its importance as a centre of potential profit and business development to the wider business world.

Subscribe to CCR Magazine

CCR World Magazine


Providing information and analysis for thousands of senior credit professionals worldwide, every quarter.

Find out more

GTS Media Ltd
81 Cambridge Road

Registered in England No: 05483197