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The UK Savings Gap

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  • Khoman, Ehsan
  • Weale, Martin

Abstract

We set out a framework for measuring the adequacy of saving in the United Kingdom by assessing the absolute level of savings based on individual preferences of different ages. We examine this relationship between age and savings using data from the Expenditure and Food Survey 2004–5. We show that, while the level of national saving is about 8.4 percentage points of net national income lower than is required if one assumes that each cohort pays its own way, wealth holdings are considerably higher than are required on the same basis. Looking at household, rather than national saving, the current pattern of benefits on public sector pensions removes the need to save for old age. While perhaps £4000m of household wealth holding can be accounted for by bequest and other transfer motives, our results suggest excess wealth holding of around £1600m in 2004.

Suggested Citation

  • Khoman, Ehsan & Weale, Martin, 2006. "The UK Savings Gap," National Institute Economic Review, National Institute of Economic and Social Research, vol. 198, pages 97-111, October.
    • Handle: RePEc:cup:nierev:v:198:y:2006:i::p:97-111_9
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