More depressing news. We are saving less in pensions, investments and insurance plans as people’s income is squeezed by the credit crisis. A massive 42% less. With fears of recession and deflation and the ever increasing size of our bills we are seeing a detrimental effect on long term savings, according to figures published by the Association of British Insurers (ABI).
Worst hit have been the sales of single premium lump sum investments and savings plans, mainly insurance bonds. Over the third quarter of 2008, the money invested in these bonds has fallen by almost 50%, when compared with the same period in 2007.
The total amount taken by insurers was £5.7bn between July and September this year, compared to £9.9bn the year before – a drop of 42%.
Similarly the amount of money invested in single premium lump sum pensions has fallen by 18% over the same period.
Savings plans via regular monthly payments have not fared as badly, although still 4% less. Sales of retirement products, such as annuities and income drawdown plans have seen a similar decline.
To a large extent sales of insurance bonds had been affected by the changes to capital gains tax (CGT) regime, introduced last year.
Over the third quarter a total of £15.8bn (still a huge amount) was saved into single premium pensions, savings and protection plans (which includes life insurance policies and critical illness policies). This is 20% less than a year ago.
It’s hardly surprising, really, that when money is tight we save less. These figures prove it.
