1 in 7 expects to increase their pension contributions
The reduction in foreclosure restrictions bolsters consumer confidence in personal finance, with one in seven expecting to increase pension contributions over the next year.
The Scottish Widows UK Household Finance Index found that optimism among UK households reached a five-year high in the second quarter of 2021 despite some extension of restrictions.
There was also more interest in long-term financial planning, along with better savings trends and a more positive long-term outlook, according to a survey by Scottish Widows.
Two in three savers said they no longer expected to delay retirement.
Sentiment around job and income security has strengthened with some workers in closed sectors returning from leave.
The overall seasonally adjusted index – which measures households’ overall perception of financial well-being – fell from 42.0 in the first quarter to 44.7 in the second quarter.
The reduction in financial strains in the second quarter also translated into a strong rebound in sentiment towards household finances over the next 12 months.
For the first time since the first quarter of 2016, UK households expect their financial well-being to improve over the coming year, with 18-34 year olds particularly optimistic about their financial outlook.
Jackie Leiper, Director of Pensions, Stock Exchange and Distribution, Scottish Widows, said: “As UK governments take a reasonably cautious approach to recovering from the lockdown, there are clear signs of growing consumer confidence. consumers. The most positive picture we can see this quarter is that more households plan to use the savings they made during the pandemic to build financial resilience.
“There was also good news for long-term financial planning, with more than two-thirds saying they didn’t expect to have to delay retirement and about one in seven considering increasing regular pension contributions to the future. over the next 12 months. “
Fewer households reduced their retirement savings in the second quarter of 2021, with around one in six households (16%) reporting a decrease in the amount saved, compared to 20% in the previous two quarters.
Compared to before the coronavirus epidemic, survey data showed that 44% of households maintained their retirement savings contributions. The percentage reporting a decline in regular funds placed in their retirement fund during the pandemic (14%) was only slightly higher than those reporting an increase (13%).
About one in seven people plan to increase their regular contributions to retirement savings in the coming year. Scottish Widows said this suggests that for some, the pandemic has increased the importance of longer-term financial planning.
Most households (68%) expected their retirement plans to stay on track despite the pandemic, and only 17% expect to delay retirement. The most common reason for delaying plans was financial uncertainty (41%).
In terms of financial resilience, 41% of those polled have achieved additional savings since February 2020, with 67% of the highest paid people putting aside more during the pandemic, compared to 18% in the lowest income bracket.
The vast majority (87%) expect to keep at least some of their savings over the next 12 months, suggesting that some of these funds will be earmarked for longer-term goals, with 45-54 year olds being most likely to keep their savings beyond next year (91%), Scottish widows predicted.
The data also revealed that the pandemic has led some to reconsider their preparations for the worst. Almost one in 10 (9%) bought a life insurance policy after the start of the pandemic, while about 6% obtained coverage for mortgages, medical bills, income and illness serious.