SUMMARY OF QUARTERLY REPORTS
Over the last twelve months we have looked at three key themes: debt, short-mid term savings and pensions. For full details and to download a copy of the reports, then please click through to the relevant section
Q1: Debt: Experiment shows that Brits could shave £29.7 billion off UK personal debt in just three months
Q2: Savings AXA Avenue report highlights 12.2 million Brits in savings dilemma – servicing debt costs five times the money earned on savings
Q3:Pensions: State pension won’t see us through the weekend: UK adults overspent state pension allowance by 158% … and that was while trying to budget!
Q1 Debt
First quarter results from AXA’s unique financial education experiment, ‘ AXA Avenue ’, indicate that regular independent financial advice can have a big impact when trying to better manage and reduce personal debt. The ‘active’ AXA Avenue households (who received financial advice) have achieved a combined reduction in personal debt of £12,150. The experiment results are encouraging because if the same level of success was replicated by the UK’s 24,479,439* million households, the UK could see personal debt reduced by over £29.7 billion**, in just three months!
So, if the AXA Avenue households were able to shave approximately 10% off their original combined debt in such a short period of time, why does UK total personal debt, which now stands at £1,148 billion*** continue to rise rapidly?
To understand more about Brit’s attitude toward their debt, AXA conducted national consumer research. Overall, the findings point to the fact that most people are complacent about debt and simply view it as a ‘fact of life’. 70% (10.9m) people said that they were not bothered about their debt because most people have some debt these days. In addition, four out of five Brits think it’s more acceptable to be in debt now than it was 20 years ago.
For more details, click the link to see a copy of the Q1 report (PDF).
During the first quarter, the residents of AXA Avenue were also introduced to the concept of Money Sickness Syndrome (MSS) by GP and stress expert Dr Roger Henderson. Accordng to Dr Roger Henderson, money worries are a significant cause of worry, anxiety and stress. Download and read his (PDF) report.
Q2 Savings
After spending the first three months of the experiment with Independent Financial Adviser, Saran Allott-Davy, exploring whether or not receiving independent financial advice can help reduce levels of personal debt - we then turned our focus to savings.
According to findings from the AXA Avenue study, more than 12.2 million "Dr. Jekylls" refuse to redirect savings to service debt thanks to their "Mr. Hyde" instincts to fund a lifestyle on credit. The report reveals that millions are facing a dilemma based on pressures to fund their ‘buy-now-pay-later’ habits on "cheap" credit, at the same time as feeling compelled to save a proportion of their income in case of emergency.
In fact, more than one in four adults are ploughing around £2 billion into savings accounts every month while overlooking the £57 billion they owe on unsecured debt. So, when should we save? Why should we save? How much should we save?
Click the link to read the report and to find out how Saran and the participants are getting on.
Q3 Living on a state pension
After spending the first six months of the experiment with Independent Financial Adviser, Saran Allot-Davy, exploring whether or not receiving independent financial advice can help reduce levels of personal debt, and increase short-medium term savings we have now turned our focus to retirement planning.
During quarter three we focused on pension provision and how people will manage when retired if they are planning to rely solely on the state pension. According to our ‘Living on a State Pension’ experiment, where we challenged households across the UK to live on the state pension for a week, all but one of the participants failed with their money running out after an average of just three days. In fact they overspent on their pension allowance by 158%... and that was whilst trying to budget! To find out more about how they got on then please read the latest AXA Avenue press release. Regional specific releases have also been issued and these can be accessed via the links below:
- Belfast
- Bristol
- London
- The Midlands
- The North West
- Scotland
- The South East
- Wales and the West
- Yorkshire
For those that took part, this experiment has been a real call to action. Many of them had visions of retiring at 55, even though they had no clear idea of how much money they were set to have as a pension. However, it is easier to make some small changes now to set aside long term savings for retirement than having to make major and uncomfortable changes later on. Our “have it all now” culture means that people are not willing to budget to set aside long term savings, which unfortunately is likely to lead to a harsh retirement for many people.”
Fortunately for our AXA Avenue participants, Saran’s advice has meant that the improvement in the combined “active” group pension income since the start of AXA Avenue is £30,999 per annum, representing an increase of 32%. To find out more about our findings and to find out how Saran and the participants are getting on, download the report.
Alternatively you can visit the FSA's website for a financial healthcheck:- http://www.moneymadeclear.fsa.gov.uk
/healthcheck/