One in five Scots has no nest-egg for a rainy day

Twenty per cent of Scots admit they have no savings. Picture: Phil Wilkinson
Twenty per cent of Scots admit they have no savings. Picture: Phil Wilkinson
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The amount of money Scots have set aside for a rainy day has fallen to 2011 levels, a new report has revealed.

One in five people admitted they had no savings at all, according to the 2014 Scottish Widows Savings Report, which saw the average savings pot dropping by £610 to just £9,463.

Meanwhile, experts have warned that the Bank of England’s five-year interest rates low has deterred people from putting money aside.

Independent financial expert Ros Altmann believes rates have been kept “far too low for far too long”, leaving savers with severe income shortfalls, many of whom will be pensioners.

She said: “The policy stance has rewarded borrowers and punished savers – the message being sent is, ‘you’re a mug to save’.”

Analysis from financial services firm Hargreaves Lansdown, found that £1,000 saved in an average account in March 2009, when the base rate dropped to its historic low of 0.5 per cent, would have edged up slightly to around £1,040.

But the impact of inflation, with the Retail Prices Index having risen by 20 per cent over this time, means that in real terms this pot would be worth just £870 now.

Separate data from financial information website Moneyfacts, found that someone saving £1,000 in the best-paying instant access account on the market today would be around £19 a year worse off than someone doing the same thing five years ago, before tax.

The total number of Scots who are managing to save anything at all in the current economic climate has fallen slightly year-on-year from 31 per cent to 29 per cent, according to the Scottish Widows report – and more than half of those surveyed said they were saving less than they did two years ago.

Almost half of Scots said they had loaned “a substantial amount” of money to family members. A quarter of people had lent money to their children, most commonly to cover living expenses, to put towards a house deposit, or to pay off debt.

A fifth of all Scottish parents and grandparents said they were saving less as a result of lending money to family members, and one in ten said they had to cut back on day-to-day living costs due to family lending.

David Lascelles, savings expert at Scottish Widows, said: “It is concerning that, despite economic improvements, the amount that Scottish people are setting aside for a rainy day is actually falling. Even more concerning is the fact that one in five people in Scotland still have no nest egg whatsoever.”

He added: “Our research shows that many people are still only thinking in the short term, for instance, almost half of people in Scotland said they prefer to spend their money rather than save, and almost two-thirds said they know they are not saving sufficiently for their long-term needs.

“This problem is exacerbated by family pressures that eat further into people’s savings, particularly for those in the middle-age groups.”