Our next report will explore how changes across product design, services, policy and workplace channels could better support low- and moderate-income households to grow their savings and strengthen their financial resilience through investing.
There is clear scope for more people in low and moderate income households to make their money work harder through investing – but progress depends on tackling behavioural, informational and structural barriers. www.nestinsight.org.uk/wp-content/u...
For this group, behavioural and informational barriers play an important role in limiting participation. For example, 62% of investors recognised that cash loses value in real terms, compared with 47% of non investors; 19% of non investors said they “don’t know”.
However, 20% of people in low and moderate income households had more than £2,000 in savings and no high cost credit or arrears, but were not investing. This suggests there is scope to significantly increase participation – potentially doubling the number of investors.
Around 9 million people in low- and moderate-income households were not investing in May 2024, and for many this is likely a sensible decision: 48% had less than £2,000 in savings, suggesting that building emergency savings should be the immediate priority.
Young people are more likely to hold high‑risk investments and to rely on peer‑driven sources such as video platforms and online forums for information about investing. This highlights the growing influence of digital channels on investment decisions – and the risks that come with them.
These positive attitudes are underpinned by a relatively strong understanding of risk: 68% of high-risk investors understood that they could lose all of their money when investing in cryptocurrencies, a further 20% understood that they could lose some of their money.
Importantly, those with high risk investments are often positive about their choices: 39% reported no regrets, 24% wished they’d invested earlier, and 11% wished they’d invested more.
Despite attracting a lot of attention, only 16% of investors in low- and moderate-income households held cryptocurrencies in May 2024 (down from 20% in 2022).
The gender gap is also growing. Between 2017 and 2024, the share of men holding financial investments rose from 16% to 26%, while participation among women barely changed.
Investment participation among those in low- and moderate-income households has risen in recent years. But it has grown faster among those in higher income households, meaning the investment participation gap is widening.
In May 2024, 21% of non-retired adults aged 25 to 64 in low- and moderate-income households held financial investments outside pensions, equivalent to around 2.3 million people.
Yesterday @nestinsight.bsky.social published new research looking into how many people in low- and moderate-income households have the potential to strengthen their financial resilience through investing. Here are some interesting findings...
Addressing this issue is a key priority for the Government, as reflected in the revival of the Pensions Commission. The Commission will explore ways to improve retirement outcomes for those already in the AE system and for those currently missing out. www.gov.uk/government/p...
AE has been a major policy success, significantly increasing pension participation. However, the statistics released today reveal that some groups still have lower participation rates, which could leave them more vulnerable to poverty in retirement.
The proportion of people who start saving but then opt out within the opt-out period has been trending upward over time. This may reflect increased cost of living pressures in recent years or could be linked to the freezing of the earnings trigger and lower earnings limit.
Pension participation also varies by ethnicity. Only 68% of eligible Pakistani and Bangladeshi employees were saving into a pension in 2022-23 to 2023-24, compared to 87% of eligible White employees.
Just 17% of the self-employed were participating in pension saving in 2023-24, down from 21% in 2009-10.
Eligible part-time employees are also less likely to be saving into a workplace pension, compared to full-time employees. That gap has widened over time.
Workplace pension participation also increases with earnings: 79% of eligible employees earning £10k-£20k were saving into a workplace pension, compared to 94% of those earning £70k or more.
But employees working for small employers were less likely to participate in workplace pension saving: only 59% of eligible employees at companies with fewer than 5 employees were saving into a workplace pension.
Around eight-in-ten (82%) employees in Great Britain were saving into a workplace pension in 2024 – this amounts to 23.3 million people in total.
New workplace pension participation statistics were published this morning, revealing that certain groups remain at greater risk of heading into retirement with insufficient savings. Here’s what you need to know 🧵
Two decades after the Pensions Commission, the focus is no longer on pension participation. Today’s challenge is adequacy, flexibility, and sustainability - and the upcoming review is likely to reflect that shift.
We have previously suggested linking both working-age and pensioner benefits to earnings growth. This would preserve purchasing power while ensuring intergenerational fairness and fiscal realism. economy2030.resolutionfoundation.org/reports/shar...
The triple lock should also be on the table. It has played a major role in boosting pensioner incomes, but it’s not without trade-offs. Given today’s fiscal pressures, it’s time to explore more balanced uprating mechanisms – ones that protect incomes while supporting long-term sustainability.
Life expectancy varies significantly across regions, so delaying retirement may be justifiable for some, but it risks penalising those in poorer areas who already face shorter retirements. www.resolutionfoundation.org/comment/why-...
The State Pension is also expected to be in scope. Demographic change and rising longevity are increasing its fiscal cost. And while raising the State Pension age can provide some relief to the public purse, it remains a blunt tool.
The review should also consider flexibility – particularly whether models like ‘sidecar’ savings accounts can help people balance long-term savings with short-term financial resilience. www.resolutionfoundation.org/publications...
This highlights a fundamental question for the review: should policy aim to deliver full adequacy for all, or act as a foundation that leaves space for individual choices and top-ups? The Pensions Commission was clear that it should be the latter.