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78% of UK adults are missing out on tax-free savings

78% of UK adults are missing out on tax-free savings alt

Recent data from the Office for National Statistics found that 78% of adults in the UK do not have an ISA [1]. This means that there are currently over 40 million individuals up and down the UK who are potentially missing out on £20,000 in tax-free savings every year. Cushon is on a mission to turn the UK into a nation of savers through workplace savings. We want to help people get comfortable with money, build financial resilience and reach their savings goals, whether that’s getting the keys to their first home, buying a new car, saving towards retirement or having a financial buffer to fall back on should unexpected circumstances occur.

By not having an ISA and utilising the tax-free allowance, UK adults are missing out on the opportunity to put away up to £20,000 each year in tax-free savings. And while it’s no secret that interest rates are at an all-time low for savers, ISAs are still one of the most attractive savings products.

Yet, despite the obvious benefits, Cushon research found that 22.78% of adults are not saving into an ISA as they believe they do not save enough money to make it worth having one. 21.45% want their money to be instantly available when they need it, highlighting a key misconception that a cash ISA doesn’t offer immediate accessibility. 13.30% don’t want or need one and 10.81% say they don’t understand ISAs so haven’t opened one. We also found that 42.32% [2] of individuals said they do not have enough savings to feel financially secure, with 31.11% citing that they don’t have enough disposable income to build a sufficient level of financial resilience.

But Covid has made us all wake up to the importance of having financial resilience and accessible savings. Cushon works with employers of all sizes to offer workplace savings as part of a holistic workplace benefits package. Employers can offer initiatives whereby the employee is able to put money aside into a savings vehicle each month straight from their pay – starting from as little as £10 per month.

With lockdown restricting our usual activities, some have found themselves with a bit more spare cash than usual and have recognised the importance of putting this money aside. And not just to cover short to mid-term priorities, but also investing in pensions and putting money aside for the long-term future. In fact, recent statistics released by the ONS found that the level of disposable income being saved has risen from 9.6% to 29.01% this year.

Offering a workplace savings scheme is a great way to support financial wellbeing – something which has never been higher on every corporate agenda. Putting even just a small amount away each month can help employees feel much more in control of their finances, helping them feel more empowered and in control of their financial situation. Employers can also contribute as part of a rewards package.

Employers have a care of duty to help support employee financial wellbeing - so, while the majority of adults don’t have an ISA, this can be remedied through the workplace by providing better and wider financial education to help people make informed decisions about their finances. Even though everyone’s financial priorities are different, we do still have one thing in common and that’s the need to have savings which are accessible and available.

[1] Methodology = (UK adult populationnumber of ISA accounts)

[2] Cushon research on financial security and its importance, a survey amongst 2,000 employees – September 2020