Rising returns catch the eye of cash savers, as Standard Life highlights how consumers feel about the outlook for their investments

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• Cash savers feel positive about outlook for returns, but majority are less certain on property values
• Standard Life highlights how current market conditions impact different investments

The eight interest rate rises by the Bank of England in the last twelve months¹ have prompted renewed positivity around cash savings, according to new research² from Standard Life, part of Phoenix Group.

With interest rates currently standing at 5%, nearly a third (31%) of UK adults with cash savings feel more positive now about their outlook for returns than a year ago - including one in ten (8%) who feel much more positive. Almost two in five (39%) feel neutral and say their feelings haven’t changed in the last 12 months.

Dean Butler, Managing Director for Retail at Standard Life, part of Phoenix Group comments: “Following a string of interest rate rises in the last year, the increasing positivity among consumers around cash returns makes sense. Several providers have significantly boosted the rates they’re offering to customers, meaning those who shop around have been able to secure decent deals. While it’s easy to be dazzled by these headline rates, it’s important to remember that with inflation at 7.9%, the purchasing power of money is reduced. Therefore, despite boosted rates, cash savers will still be missing out in the long run. In order to make real returns, inflation would need to fall below 5% and it’s hard to know over what timeframe this will happen.”

Property prices provide less positivity

Property prices have traditionally occupied a special place in the nation’s consciousness, but despite values rising over the last decade³, only a fifth (19%) of homeowners feel positive about property values in the next year. A similar number (20%) feel negative about the outlook for values in the near-term, while the majority (52%) feel neutral.

Dean Butler continues: “Putting money into property has long been the aspiration of many and with property values rising over the last ten years, it’s been seen as a sound investment. However, it appears the property market is stalling at present, and with mortgage rates soaring over the past few months, people are less optimistic about the outlook for the next year.

“Clearly many people will feel reassured at having quick and easy access to their money at the moment, but it’s worth bearing in mind the benefits of putting cash into long term savings, such as a pension, in this environment too. For example, pension plans are invested and will have the chance to grow and offer the potential to beat the rate of inflation. In addition, anyone in a workplace pension scheme also receives a minimum 3% employer contributions of your qualifying earnings – with some employers paying in more than this, or even matching what you put into your pot. Furthermore, most people will get 20% tax relief from the UK Government on their personal pension payments, so it will only cost you £80 to have £100 invested into your pension plan.

“Ultimately, the best place for your savings will depend on your goals and priorities and these will shift over time, but it often makes sense to have a mix of options. It’s also important to understand the pros and cons of your different options, so you can make the best choice for your circumstances.”

ENDS

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Notes to Editors

¹ – Since August 2022 https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp
² - Opinium conducted research among 2000 UK adults aged 18+ between 23 and 27 June 2023. Results have been weighted to be nationally representative.
³ – Since May 2012 https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/may2023#uk-house-prices

About Standard Life

• Standard Life is a brand that has been trusted to look after peoples' life savings for nearly 200 years
• Today it proudly serves millions of customers who come to Standard Life directly, through advisers and through their employer' pension scheme.
• Standard Life is part of the Phoenix Group, the largest long-term savings and retirement business in the UK. We're proud to be building on nearly 200 years of Standard Life heritage together
• Our products include a variety of Pensions, Bonds and Retirement options to suit people’s needs, helping our customers to invest and save for their future. We’re proud to offer a leading range of sustainable and responsible investment options.
• We support our customers on their journey to and through retirement with comprehensive, easy-to-understand guidance so they can invest in the right way for their needs, and plan a future they feel confident about.
• The value of investments can go down as well as up, and may be worth less than originally invested.