One in three employees not saving for hard times

One in three UK employees would have little or no savings to fall back on if they were made redundant tomorrow.

A survey of 2,013 staff conducted by employee benefits provider Jardine Lloyd Thompson also showed that although up to two-thirds of employers were gearing up for more job cuts in the coming months as the credit crunch continues to bite, more than half (56%) of employees had less than four months’ salary set aside for a rainy day.

The research also reveals significant regional differences.

The area that was least prepared for hard times was Northern Ireland, where 47% of employees were found to have less than a month’s salary saved, and 73% had less than four months’ worth set aside.

In contrast, Londoners had squirreled away the most money, with 35% of employees having four to 12 months’ salary set aside, while one in five had more than a year’s worth of savings.

Employers should help

Richard Roper, head of sales at Jardine Lloyd Thompson, said employers must provide financial education.

“For anyone with less than four months’ savings they should be focused on clearing any debt and building a sensible amount of savings before they think about other financial products,” he said.

“This creates the right foundation for future financial planning.

“In the current financial climate, people should consider their savings in light of other financial pressures, and what would happen if they were made redundant.”

In July, a survey by Yorkshire Building Society found that the average worker would run out of money within 52 days if they lost their job.

It also found that 36% would run out of cash in just 11 days, and 90% had no form of income protection to cover their bills if they became unable to work or lost their job.

Certain groups were found to be more at risk of hardship than others, including divorcees – whose savings would only last an average of 35 days, and part-timers, who would be broke within 37 days.

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