Cheap loans have destroyed UK’s savings culture, says pensions professor

A generation of Brits will be left poor in retirement because they have become obsessed with borrowing and spending rather than saving, pensions professor David Blake said this morning.

 

The UK used to be good at saving, for rainy days, for imminent spending and for the long-term – but that will have to be relearned over many years, he warned.

 

The Cass Business School teacher ran a study, with Santander and Moody’s Analytics, into investors’ reactions when they find an unexpected shortfall in their savings.

 

He found people are unwilling either to save more or to take more risks with their investments to make up that gap – the only options if they are to get their savings back on track.

 

“We have lost the savings culture in this country. Easy borrowing became a way for people to forget the need to save,” Blake said, presenting the results of a study run by the Pensions Institute, Santander and Moody’s Analytics.

 

“This is not just young people, we surveyed people in their 40s, 50s and 60s too.”

 

And only the pain of a retirement crisis will re-start the culture of savings, he predicts.

 

“There is a crunch coming for the next generation, who will then teach their grandchildren about the importance of savings,” the professor said.