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Poorest To Remain In The Red Until At Least 2020, As They Struggle To Set Aside Money To Save

Press release   •   Nov 12, 2014 00:00 GMT

·- The poorest 20 per cent of UK households have had no potential savings1 – money available to save - since 2002

- Meanwhile, the highest-earning 20 per cent of the population will have an average £18,680 to save this year

- The savings gap between the richest 20 per cent and the poorest 20 per cent currently stands at over £20,000

- This is expected to fall back marginally to £19,020 in 2015

The poorest 20 per cent of UK households have been unable to set money aside in savings since 2002, according to figures from the Post Office Future of Savings report. The study reveals the potential savings of different income groups – focusing particularly on the richest 20 per cent and poorest 20 per cent according to household income – and what the future holds for UK savers.

The situation for lowest income group of the population remains bleak, with the amount they have available to save (their ‘potential savings2’) unlikely to improve before 2020.  Those caught in a savings wasteland have spent an average £1,910 more than they have earned this year -  meaning they have nothing available to put aside.  These figures are made all the more shocking when compared with the richest 20 per cent of UK households that will have an average £18,680 to save over the course of 2014.

The savings gap between the richest 20 per cent and poorest 20 per cent of people currently stands at more than £20,000 per annum and although set to shrink slightly in 2015, will remain at £19,020.

Peak savings gap

The savings gap between these income brackets peaked in 2010, with a difference of £25,920 between the amounts the richest 20 per cent and the poorest 20 per cent had available to save per annum.  This was the result of the highest earners continuing to save following the financial crisis, while the poorest 20 per cent of the UK struggled to keep up with the rising cost of living.  While the gap has declined gradually over recent years, this is more on account of the richest spending rather than saving than the poorest replenishing their pots.

Average available savings by income bracket

Year

Highest 20 per cent

Lowest 20 per cent

2010

£23,336

-£2,589

2011

£20,480

-£1,798

2012

£22,706

-£2,316

2013

£19,751

-£2,015

2014

£18,682

-£1,906

2015

£17,356

-£1,668

2016

£16,344

-£1,463

2017

£16,332

-£1,258

2018

£14,320

-£1,053

Henk Van Hulle, head of savings and investments at the Post Office said: “At face value the savings gap between the richest and poorest appears to be shrinking.  However this is largely due to wealthier households choosing to save less of their income as consumer confidence in the economic recovery increased.  The poorest households remain in the red and without any chance of boosting their savings this decade.  We are still in the midst of a savings crunch for a significant number of people – made all the more worrying as their outgoings continue to outstrip their income.

“Savings are predicted to drop on average for everyone in the UK in the next few years. It is clear that this problem needs to be addressed.  Those who do have the ability to save should build up a buffer while they can - as even a ‘little and often’ approach can make a difference.  Post Office’s savings products answer a variety of needs and are available through at over 11,500 branches nationwide, online and over the phone.”

Ends

Notes to editors 

1.  Potential saving is the amount of money left over after disposable income minus total expenditure, whereby we cannot say for certain this money is saved

2.  Research carried out by Cebr on behalf of Post Office in April 2014 calculated using data from the Office for National Statistics Family Spending Survey and Cebr analysis


The Post Office has won the following awards for its popular savings range:

·  Best Cash ISA Provider  - 2014 Moneynet Awards

·  Best Fixed Rate Bond Provider – 2013 Moneynet Awards

·  Best Direct Savings Account Provider – Your Money Direct Awards 2013

·  Best Fixed Rate Provider  – 2012 Moneyfacts Awards

·  Trusted Provider – Moneywise 2012

·  Best ISA provider for consistency of rates 2012 – Moneywise 2012

·  Best Fixed Rate Bond Provider  – 2012 Moneynet Awards

·  Commended Best High Street Savings Provider – Consumer Moneyfacts Awards 2012

·  Best Savings Provider – MoneySupermarket Supers Awards 2011

·  Best High Street Savings Provider - Consumer Moneyfacts Awards 2011

·  Best Savings Account for consistency of rates - Moneywise Awards 2011

·  Best Savings Provider - What Investment Readership Awards 2011

·  Trusted Provider – Money Wise Awards 2011

·  Best Fixed Rate Bond Provider - 2011 Moneynet Awards

·  Best Fixed Rate Savings Provider - 2010 Moneyfacts Awards

About the Post Office

The Post Office (Post Office Limited) has an unrivalled national network of over 11,500 branches across the UK, more than all the high street banks combined, and sits at the heart of communities in Northern Ireland, Scotland, Wales and England. The Post Office has made a commitment to maintaining its network of branches at its current size and reach. It provides around 170 different products and services spanning financial services including savings, insurance, loans, mortgages and credit cards; Government services; telephony; foreign currency; travel insurance and mail services.

The Post Office serves over 17 million customers a week and a third of small businesses. Some 99.7% of the total population live within three miles of a post office and over 97% live with one mile of a post office. For many rural communities, the post office is the only retail outlet. Post Offices branches remain highly valued and trusted, and are the focal point of many communities. For more information, visit www.postoffice.co.uk.

Bank of Ireland has supported customers in the UK for many decades and is the exclusive financial services partner to the Post Office.  Bank of Ireland primarily operates in the UK through its wholly owned and separately incorporated subsidiary Bank of Ireland (UK) plc, which is authorised and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.  Activities related to the Post Office partnership are conducted within this entity and as such, all retail deposits up to £85,000 with the Post Office are protected under the UK’s Financial Services Compensation Scheme.  At 31 December 2013, Bank of Ireland (UK) plc had a loan to deposit ratio of 86% with customer deposits of c. £21 billion utilised to fund customer lending of c. £18 billion (primarily comprising c. £13 billion of UK residential mortgages). 

Post Office Ltd. Registered in England and Wales no: 2154540. Registered Office: 148 Old Street, London, EC1V 9HQ.

The Post Office and the Post Office symbol are registered trademarks of Post Office Ltd.

Post Office Limited is an appointed representative of Bank of Ireland (UK) plc which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Bank of Ireland UK is a trading name of Bank of Ireland (UK) plc which is registered in England & Wales (No. 7022885), Bow Bells House, 1 Bread Street, London EC4M 9BE.