Reviving Britain’s savings culture has never been more crucial

A new report issued by the OECD, ranking the state pension in the UK against other countries, has revealed that individuals in Britain without a private pension have the third lowest replacement rate in the OECD – that is, how much the state pension is worth compared to the average working salary it is superseding.

The replacement rate in the UK is just 16 per cent of an average salary, whilst the typical OECD amount is 20.5 per cent.

The report also adds that the UK’s highest earners had the lowest replacement rate out of the wealthier countries, whilst Britain’s low income earners were mid-range.

As such, the message here is clear.  Saving for retirement has never been more important, and never been more of a personal responsibility.

It is our duty within the financial services industry to help to revitalise Britain’s savings culture to ensure future generations of retirees do not have to downsize their retirement ambitions and face an often devastating drop in living standards in old age.

With an aging population in the UK, the country struggles now to support the state pension system, which will only become more of a burden on public finances in years to come.

This, coupled with rising living costs; increasing deficits in company pension schemes; escalating medical and care costs; and constant changes in taxation means the government will not be in a position to financially support retirees in the future.

As IFAs we need to spread the word that the time to take action is now.  Similarly, that it is never too late to start saving and there are always things that can be done to secure a more financially stable retirement.  Consulting an independent financial adviser who will help to devise, manage and implement a successful financial strategy in order to safeguard and maximise wealth is indeed the best way to secure financial freedom.

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