Media Release

PRESS RELEASE: Mid-life income squeeze a barrier to higher UK savings rate, finds new poll

The mid-life income squeeze faced by households aged between 35-44 leads almost half (48%) of those who stop saving into a pension do so because of cash flow troubles according to exclusive polling in a new report from leading think tank the Social Market Foundation (SMF), supported by Barclays.

The SMF report, Savings in the Balance: Managing risk in a post-crisis world, explores why, when and how UK households choose to save, and the factors that prompt them to begin and stop investing.

Polling for the report, conducted by Populus, shows

  • Cash flow fears are the most common reason why UK households stop saving and investing – cited by 42% of respondents.
  • Cash flow is also important for pension savings decisions – cited in 35% of cases where an individual stopped paying into a pension product.
  • When broken down by age, the SMF found that it was a particularly strong barrier to saving among those aged 35-44, when nearly half (48%) of all cases where someone stops saving into a pension were influenced by cash flow problems.

To help address the effect of the mid-life squeeze on savings, the SMF calls on the government to build on current pension reforms by creating an earlier window for exercising freedom and choice in pensions savings, at age 35 – when the polling found individuals were most likely to stop saving due to cash flow pressures. This window would provide an earlier opportunity to educate and engage consumers about their pension goals and savings options, spurring a new wave of product innovation and competition in the financial services industry targeted at the new window.

The SMF report also reveal that consumers prefer short-term savings products which they feel allow them easy access to their cash and are deterred from using long-term investment products as they feel locking cash away is as risky as putting capital at risk in investments. To encourage higher rates of long-term savings and investment, Savings in the Balance proposes:

  • Removing stamp duty on all share transactions by retail investors, building on the success of abolition of the tax in the AIM growth market
  • Creating an additional £2,000 tax-free threshold for people to invest in bonds via an ISA
  • Financial product advertising and market materials focus on long-term information rather than year-by-year returns

Commenting on the findings, Katie Evans, report co-author and SMF economist, said;

“Giving access to pension savings at 35 would provide an opportunity for individuals to engage with their pension providers. This could be used to educate and to build financial confidence, helping consumers articulate their goals for retirement and understand the steps they need to take to achieve them. The benefits of this intervention, helping to set people on the path to healthy savings 30 years before retirement, should easily outweigh the cost of any early withdrawals.”

Notes to Editors:

  • Embargoed copies of Savings in the Balance: Managing risk in a post-crisis world are available on request. Please contact
  • Opinion research for this report was carried out by Populus. 2014 adults were surveyed online on 1-2 October, with the resulting data weighted to be representative of all British adults over 18 years of age.
  • This report is sponsored by Barclays. The SMF retains absolute editorial control over its outputs.
  • The SMF is a leading independent UK think tank established in 1989 with the aim of marrying market economies with social justice. We develop innovative ideas across a broad range of economic and social policy, taking a pro-market rather than free-market approach.


Amanda Wolthuizen on or 07906 778 516.


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