Young Brits not saving in ISAs

25 March 2011

Equiniti, has revealed that young people in the UK are significantly less likely to be investing in ISAs.

Latest research into consumer behaviour by Equiniti, the UK’s leading share registration group, has revealed that young people in the UK (those under 30) are significantly less likely to be taking advantage of the benefits of investing in ISAs. In 2010 only 37.9% of those aged under 30 and working took out an ISA - compared to 80.4% of those aged over 60 and still working.

With the end of financial year rapidly approaching, only 31.3% of younger British workers has bought into an ISA, with 27% undecided* as to whether or not to put a last minute lump sum into an ISA, while 41.7% have no intention of saving through an ISA in the 2010/2011 financial year.

For other age groups, 28.7% of those aged 31-40 and working have already bought into an ISA for the 2010/2011 tax year, whilst 21.3% are still undecided about whether to place a lump sum into an ISA.

For those aged 41-50 the figures are 39.6% and 17.2% respectively. For those aged 51-60 the figures are 56.3% and 12.0% respectively.

Meanwhile for those aged over 60 and still employed, an impressive 62.7% of this age group has already placed money into an ISA this year, with 14.4% undecided, and close to one in four (22.9%) not planning to invest through an ISA in 2010/2011. 

Equiniti Investment Services Director, Mark Taylor, commented: "Our research indicates that younger workers are finding it difficult to put money aside for savings, many are wanting to buy their first home, get married or pay-off their student debt but are struggling. Awareness and understanding of the benefits of ISAs remains low, with younger workers reluctant to save because they believe that they are tying money-up for the long term and will have limited access. In some cases there is evidence to suggest that they are confusing ISAs with Pensions. As an industry, we have a role to play in educating the workforce and improving financial literacy. Equiniti believes that this starts in the workplace and we are working with a number of our clients to achieve this."

Equiniti commissioned independent research into the attitudes and behaviour of working individuals. The research was conducted between March 1 and March 10, 2011.

There were 1,016 participants in the research taken from Equiniti’s Shareview client base. 

*as at March 10; four weeks before the end of the 2010/2011 financial year.

ENDS

Notes to Editors

Facts and Figures:

  • 4.9 million working 16-30 year olds have never saved into an ISA – 7.5 million have. (Source: Office of National Statistics)
  • Saving into ISAs among young people is likely to be even lower when non-workers are considered; 20.6% of 16-24 year olds are unemployed - an approximate 1.7 million people. (Source: Office of National Statistics)
  • Meanwhile 2.6 million working 31 to 40 year olds have never saved into an ISA, which is also the case for 2.1 million working 41 to 50 year olds and 960,475 working 51 to 60 year olds. (Source: Office of National Statistics)

Key Points from the Equiniti research:

  • Of the 80.2% of the working population who have saved into an ISA, the average number of ISA accounts saved into is 5.45. This equates to approximately one every second year, since the 1999/2000 tax year when ISAs were introduced - replacing the earlier Personal Equity Plans (PEPs) and Tax-Exempt Special Savings Accounts (TESSAs).
  • The end of the 2010/2011 financial year marks the 12th year for ISAs, over this period working males have saved an average £10,000 more than working females.
  • The average sum saved over that period by males is £34,098 versus £24,318 for females.
  • Of these saved amounts, the average male still has £26,831 while the average amount for working females is £17,215.
  • Males are more likely to invest a lump sum compared to females (65.3% v 57.4%). Females are more likely to make monthly contributions, and a combination of monthly contributions and lump sum payments compared to males (41.4% v 32.8%)
  • People under 30 and people over 50 prefer Cash ISAs.
  • Females (64.9%) prefer Cash ISAs versus 49.8% for males.
  • Almost twice as many males than females tend to invest in Funds through stocks and Shares ISAs (19.0% v 10.4% respectively).
  • People aged between 31 and 50 are most likely to invest in a combination of ISAs (Cash and Stocks and Shares).

Financial Education

Equiniti launched a new online financial literacy campaign last month in recognition of the growing need for financial education; and the need to increase understanding amongst the adult population, as well as inspire action by providing some of the tools and guidance needed. The first of the series features a cartoon operetta on Inflation.

 

About Equiniti:

Equiniti is the UK’s leading provider of share registration, retail investor services and employee share plan administration services, acting for over 50% of the FTSE100 and 40% of the FTSE250. Equiniti is responsible for 18 million shareholder accounts. Equiniti is part of the Equiniti Group which, in addition to the services listed above, is a leading specialist provider of pensions administration and payments services under sister company, Xafinity. The Equiniti Group serves over 1,700 clients, has combined revenues of over £300 million and has offices in 22 locations across the UK and Northern Ireland.

Note: Equiniti offers a stocks and shares ISA. The ISA allows investors to purchase shares, corporate bonds, gilts, funds and exchange-traded funds (any stock traded on what the HM Revenue & Customs deem ‘Recognised Markets’) as well as providing a seamless link from employee scheme maturity for continued saving. Click here for more information