Key findings

As many as 1-in-3 (30 per cent) of working-age adults live in families with savings below £1,000, leaving them financially vulnerable and ill-equipped to respond to small cashflow shocks.

Saving for retirement is also too low. 39 per cent of individuals aged 22 to the State Pension age (equivalent to 13 million people) were undersaving for retirement when measured against target replacement rates of at least two third of pre-retirement income.

Precautionary and pension saving are in tension. Evidence indicates that when default auto-enrolment contribution rates were increased from 2 per cent to 8 per cent between 2018 and 2019, for every £1 reduction in take-home pay due to higher pension contributions, employees reduced their consumption by 34p, with the rest of the contribution funded through either lower liquid saving or higher debt.


Whether to cushion the shocks that life throws at us or to provide for ourselves in retirement, millions of UK families don’t save enough. This widely recognised problem manifests in three distinct ways: a lack of accessible liquid savings to cushion small cashflow shocks, inadequate precautionary saving to see people through large and unexpected income shocks, and insufficient saving to provide an adequate income in retirement. 

This report shows how the UK’s savings policy architecture can be transformed to provide a joined-up solution to these three interconnected problems. In doing so, we draw on behavioural insights and lessons from how other countries navigate the same issues. As well as providing a concrete path towards financial security throughout the lifecycle, the integrated system outlined here can also generate the resources to finance some of the higher investment required to end the UK’s economic stagnation.