11.6 million adults to maintain extra savings built up in pandemic, study suggests

More than 11.6 million adults will maintain the extra savings they built up during the COVID-19, new findings from The Openwork Partnership have indicated.

The financial advice and investment network crisis suggested that a “new mood of caution” is hitting home.

The Openwork Partnership’s study was carried out among 2,001 adults across the UK and based on population estimates from the Office for National Statistics (ONS). It revealed that over half (51%) of people in the UK have put the extra savings into existing instant access accounts and cash ISAs, although The Openwork Partnership is urging them to look beyond cash accounts paying low rates to investment accounts offering potentially higher returns.

Government data shows the household savings ratio – which is how much households save as a proportion of income – hit an all-time high of 23.4% in the second quarter of 2020, before dropping back to 11.7% in the second quarter of this year, although this is still the highest since 1996.

According to The Openwork Partnership’s latest research, around two in five (42%) people who have saved more during the pandemic plan to carry on, while just one in 12 (8%) are planning to spend all the extra savings.

Around a quarter (24%) of people said they are cautious with money as a result of the pandemic, although one in five (20%) revealed the crisis has convinced them to keep their finances under control. Another 18% indicated it has convinced them to save regularly, the findings showed.

“The COVID-19 pandemic forced many people to save more as quite simply they couldn’t spend during lockdown restrictions and that has continued for some during most of this year,” commented The Openwork Partnership chief commercial officer, Mike Morrow.

“It is encouraging that millions plan to keep up with the extra savings now that the economy is returning to normal, and there are more opportunities and temptations to spend after a tough 18 months.

“Financial advisers can help them make the most of their money and work out a financial plan as piling extra money into cash savings is not necessarily the best approach when interest rates are at historic lows.”

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