The financial services industry has joined forces with consumer groups in a bid to address the savings crisis.
The new body, called the Savings and Investment Policy (Saip), believes retirement could reach a ‘tipping’ point by 2035 unless measures are taken now.
The body believes there is a ‘once in a generation’ opportunity to change people’s attitudes to saving and develop long-term policies to avert this looming economic and social crisis.
The group has launched 'The savings & investments policy project', which is managed by the financial services industry membership association (TSIP), and designed to stimulate debate on the role saving plays in securing people’s financial future and stress how saving ensures growth, stability and prosperity for the UK.
It will develop strategic proposals for new savings and investments policies to help rebuild consumer confidence and trust in long term savings products.
The project believes the so-called ‘baby boomers’ will be the last generation to enjoy financial security during their lifetime. It warns people under 35 will have only two-thirds of the time to save twice as much money to provide the level of retirement income their grandparents enjoyed.
While it is often assumed that people will simply work until they are 75 years of age, the project points out that this carries significant social consequences with younger people competing against an older, more experienced workforce.
Saip chairman and BlackRock head of UK retail Tony Stenning (pictured) said: ‘Fear, confusion and a lack of understanding is exacerbating this problem through inactivity, apathy and disengagement. Today’s pensioners are benefiting from the ingrained savings habits and more generous pensions of the past – but the future is going to be different.
He added: 'Over the past 25 years both the State and employers have had to significantly reduce the levels of income that people can expect in retirement. This means people need to save more just to maintain the same standard of living as their parents, meanwhile given increasing longevity their retirement pot will also have to work much harder to support their longer lives.'
Saip comprises the following 22 firms:
JP Morgan Asset Management
Lloyds Banking Group