AIFA and Aegon deliver blueprint for rebuilding UK savings culture

Chancellor George Osborne is being urged to honour his pre-election pledge a Conservative government would restore Britain’s savings culture.

AIFA, in association with insurance giant Aegon, has produced a White Paper which includes an eight-point plan it says would encourage saving if implemented.

Additionally, it says its proposals, which include reintroducing savings clubs in schools and removing the £150 tax limit for financial advice for employees, could be implemented "quickly" by the David Cameron-led coalition.

"Given the current economic challenges, we believe it is vital the new Government acts decisively to restore a savings culture in the UK," AIFA director general Chris Cummings says.

"Individually, and as a nation, we need to rediscover thrift and true prudence."

The White Paper, which has been a year in the making, points out the UK has the second-lowest savings rate of all OECD countries, according to NIESR data produced last year.

But while the recession has awakened consumers' fears over their finances, AIFA and Aegon says improving economic conditions could soon help them forget.

Francis McGee, head of corporate affairs at Aegon, says: "We have had a financial crisis in Britain and people have become aware of their vulnerability.

"We are worried that, when things improve, people fill forget all about that feeling of vulnerability and return to a world of over-consumption."

Cummings and McGee say previous attempts to engender a savings culture in Britain, such as via Child Trust Funds and stakeholder pensions, have proved "patchy".

Aegon and AIFA's eight measures for the coalition government

1). Make saving easier by introducing the facility for people to ask for ‘save back' instead of ‘cash back' at retail outlets - using existing infrastructure to allow people to save at almost any time and at any location.

2). Build the foundation of a savings culture among school children through introducing school savings clubs.

3). Create savings networks within the workplace or other groups such as extended family, friends or those with a common savings goal to reinforce positive attitudes to saving and provide ‘weight watchers-style' peer support and pressure to save.

4). Reform regulation to boost the availability of professional and impartial financial advice and information.

5). Change product information so it ties saving to ‘real outcome' targets. It is crucial to align products with savings outcomes that people recognise as inherently desirable or necessary, such as buying a house.

6). More demanding financial education targets. The Government must commit to ensuring a number of statutory hours per term dedicated to finance, budgetary and savings education.

7). Adjust regulation to boost the availability of advice. Moneymadeclear is part of the answer to improving access to advice but generic advice services need a pool of professional regulated services to direct people to and we see a risk the pool will contract in future.

8). Remove the £150 tax limit for financial advice for employees. By removing this limit, we believe it will encourage more people to seek advice in the workplace and, as a result, make more and better provision for themselves.