Britain’s ‘accidental savers’ – who are they and what are they doing with their windfall?

The Covid-19 pandemic has had a profoundly negative effect on the financial security of millions of households.

Claims for Universal Credit have soared, nearly ten million jobs have been furloughed, more than two million self-employed people have received grants from HMRC, and millions more have missed out on the various support schemes available. While this is a familiar picture, there is another story. A significant number of people whose income has remained stable have been able to reduce their expenditure on commuting, holidays and other leisure activities due to lockdown.

Analysing official figures and using the results of a survey of 10,000 employees that LCP undertook last year, this paper delves into this group of ‘accidental savers’ and how far we expect this increased rate of saving to persist once the economy and society emerge from the current restrictions.

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Key discussion points include:

• Over 6 million workers have found themselves saving more as a result of the pandemic;
• These ‘accidental savers’ need to consider how this windfall can be used to put them on a firmer financial footing going forward;
• New ways of working offer the potential for a smaller but significant group of ‘accidental savers’ on an ongoing basis as more people work from home on an ongoing basis;
• How pension providers and employers should help this group channel their extra cash into savings. More needs to be done to raise awareness of the best way to use this money and to remove the barriers to additional pension saving.