Precautionary tales

Families in Britain are confronted with what can be termed a ‘triple savings challenge’. This encompasses a lack of accessible ‘rainy day’ savings to cushion small cashflow shocks, inadequate precautionary saving to see people through large and unexpected income shocks, and insufficient saving to provide an adequate income in retirement. These three savings challenges are intrinsically linked. However, existing policies have treated them as separate objectives creating a tension where families must choose between saving for precautionary purposes, or saving for retirement.

This report draws on behavioural insights and lessons from how other countries navigate the same issues to outline how the UK’s savings policy architecture can be transformed to provide a joined-up solution to Britain’s triple savings challenge.