Independent financial advice remains the best route to saving correctly and preparing for retirement, Vince Cable says.
The Liberal Democrat shadow chancellor challenged the more conventional solutions to poor savings statistics, such as financial education, dubbing them “simple platitudes”.
He was speaking today at the launch of the second Scottish Widows Savings and Investments Report, which suggested simpler products and greater incentives to save, as well as education, would help improve people’s financial prospects in retirement.
“The most important thing is access to independent financial advice,” Cable said. Referring to the Money Guidance proposals put forward in the Thoresen Review, he added: “The idea of an independent network of advice available throughout the country is a good thing but it isn’t happening.
“Advice like that, without any strings, is a big requirement and one that, so far, has not been met.”
Cable said he was sceptical of some of the more common suggestions for improving people’s savings in retirement.
He said the principle of saving itself should not necessarily be promoted as a positive thing.
“Encouraging people to save might actually be the wrong thing to do,” he said. “If someone has a large credit card debt, would it be right to promote a savings product? It is not self evident that there is an overall case for promoting savings. It is possible to have too much savings rather than too little.”
The Scottish Widows report addressed dwindling savings statistics which suggest the UK economy-wide saving rate fell to 2.9% in 2007.
It asked respondents where they thought the responsibility for saving should lie (themselves: 70%, government: 38%, financial services: 17%), as well as their financial priorities for the year ahead.
It suggested greater education, simpler products and literature, as well as greater incentives to save, such as Child Trust Funds (CTFs), as its three key solutions.
Gordon Greig, head of savings and investments at Scottish Widows, says: “The report demonstrates the need to understand people’s attitudes to saving, and highlights what needs to be done to encourage the nation to save.
“People are finding it increasingly difficult to save. There are two main reasons for this – either lack of spare funds or the perception that products are too complicated.”
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