abrdn is urging the government not to unveil radical policies that may impact older savers and investors, after its study revealed a generational divide between those with an appetite to save and invest.
The asset manager’s Savings Ladder Index found that overall the nation’s propensity to save and invest was boosted by four percentage points between May 2024 and September 2024. This was likely fuelled by falling interest rates and a change in government.
In September, the percentage of people confident about their own financial situation increased from 32% to 38%, while the number of people confident about the performance of the UK economy overall increased from 17% to 19%.
However, there was a significant generational divide, with the increase primarily driven by young people aged 18- 34. In contrast, confidence among 35 – 54-year-olds has increased by just a few percentage points. For those aged 55 and over the figure has remained largely static, and in some cases has reversed. It comes ahead of the autumn Budget and growing speculation that the Chancellor will make changes to pensions, capital gains tax and inheritance tax.
Sarah Moody, chief corporate affairs and sustainability officer at abrdn, said it was positive to see the increase among younger generations, but warned it should not leave behind those who have carefully saved and invested over the years.
Moody said: “We must now cultivate these green shoots of progress into a national culture of saving and investing for the long term. We urge the government to use the Budget as an opportunity to continue building on this positive trend rather than dampening nascent appetite for saving and investing by eroding the benefits of doing so.”
Abrdn is calling on the government to simplify the ISA regime, overhaul financial education in schools to ensure more people have access to financial education and scrap stamp duty on UK shares and investment trusts.
In addition, the firm said it would like to see the government launch a national campaign highlighting the benefits of long-term investing.
Its survey showed that almost one in five (17%) UK adults have no savings and no investments at all, equating to 9.2m people. Those with lower incomes are more likely to hold no savings and no investments than those with higher incomes.
Paul Diggle, chief economist at abrdn, said: “The Government is walking a difficult tightrope. It needs to both raise taxes to finance planned increases in spending, while also maintaining and indeed enhancing the UK’s reputation as a place to invest and do business. These two aims could easily come into conflict, especially given how fragile the improvement in consumer confidence and people’s willingness to save and invest seems to be. So any changes should be carefully considered.”
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