Savings index

Regular savers roar to life during ISA season

  • ‘ISA season’ coincided with an uplift in consumer sentiment on savings.
  • Two thirds of total annual ISA business is expected during the ISA season alone.
  • Consumers urged by Nationwide to save regularly throughout the year.
  • An improvement in the perception of Government policy.

March saw a three-point uplift in the Nationwide Savings Index, following on from the previous month’s six-point rise.

A three percentage point increase in the frequency of regular saving (51% from 48%) played a part in this latest increase and the timing may not be a surprise given that March is in the midst of the busy ‘ISA season’.

The months between February and May are sometimes known as the ‘ISA season’ because this is the time of the year when many savers rush to use their annual ISA allowance either side of the tax year. And it is possible that March, the last full month before the end of the tax year, may have had a positive impact on consumer sentiment on savings. There has also been a slight improvement in the perception of Government policy encouraging people to save.

Andy Hutchinson, Nationwide’s head of savings, said: “Last month I said that, as we approach the end of the tax year, we would expect to see more people open or top up their ISAs before they lose this year’s annual ISA allowance forever. This certainly seems to be the case and we expect to see around two thirds of the total ISA business in the savings industry happen between February and May.

“Now that the new tax year has started, some savers’ attention will be switched onto saving as early as possible in an ISA to maximise their tax benefit. With this in mind, it wouldn’t be a surprise to me if the Savings Index rose again in April. There has already been a nine-point increase since January 2010.”

Consumers urged by Nationwide to save regularly throughout the year

  • Despite an improvement in the number of regular savers, 21% of consumers are still not saving anything at all.

Andy Hutchinson said: “Unfortunately, there are still a lot of people who are not saving. We believe that ISAs should be the first port of call for people’s savings and investments at any time of the year, not just around the time of the end of one tax year and the start of the next. We therefore encourage consumers to consider using their ISA allowance throughout the year, getting into a regular savings habit along the way.”

An improvement in the perception of Government policy

  • The number of people who believe the Government encourages people to save increased (19% from 18%), while those who believe the Government discourages them from saving decreased (42% from 43%).

Whilst the increase in the number of regular savers was a main driver in the improvement of the Savings Index, there was also another factor. The feeling towards government policy encouraging people to save improved slightly. With the annual ISA allowance of £10,200 being available to all since 6 April 2010, there may be scope for more improvement in next month’s Savings Index.

Andy Hutchinson said: “It seems that the continuing low interest rate environment might not be deterring people from putting their money away and good deals continue to be available, especially to those wishing to save over the long-term.”

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Introduction from Nationwide’s head of savings, Andy Hutchinson

“Welcome to the Nationwide Savings Index website. Nationwide already has a House Price and Consumer Confidence Index, so it seemed like a natural step to develop a Savings Index to measure popular opinion about saving.

“As the second largest savings provider in the UK, we feel that it’s important to know what the population thinks about saving, how important it is to them and whether they think the Government encourages people to save.

“Our Savings Index has already shown some interesting results and we look forward to developing it further. If you have any queries about the Index, please do use the feedback page to contact us.

“I hope you enjoy learning about our new Index through this website, which is updated monthly with our new results. For further information, please go to the FAQs section of this website.”