Research by investment giant Abrdn has found that 44% of UK adults have poor financial literacy.

Abrn is urging the next UK government to urgently consider the doubling of minimum pension contributions to 16% and the scrapping of stamp duty on UK shares and investment trusts “to kickstart the change in habits that the country will need in the years ahead.”

The research shows the top 5% of people by investment wealth in the UK hold 47% of the total value of UK
investments.

About 64% of UK adults are also being held back from investing in the next six months due to low risk tolerance, lack of confidence in the UK stock market and low engagement with investment products, according to the Abrdn research.

The findings come from the global investment company’s new ‘Abrdn Savings Ladder Index.’ Abrdn manages and administers £508 billion of assets for clients.

The index will track levels of and approaches towards savings and investments over time among the public.

It will also measure how likely people are to start saving and investing more via a ‘Propensity to Save and Invest’ score.

The index will also regularly gauge UK adult financial literacy for the first time, to Abrdn’s knowledge, which Abrdn believes is vital if financial education is to be funded at scale by the UK government.

Abrdn said: “The OECD collates and publishes data on adult financial literacy levels across 39 countries, and it is striking that the UK does not take part …

“With permission from the Global Financial Literacy Excellence Centre, Abrdn asked its ‘Big 3’ financial literacy questions, which are used as an international standard for comparison.

“The research suggests that 44% of UK adults have poor financial literacy, extrapolating to 23.3 million UK adults.”

The Abrdn Savings Ladder Index was conducted by Opinium Research amongst a nationally representative sample of 3,000 UK adults.

The index found that UK adults have an average Propensity to Save score of 53/100, an average Propensity to Invest score of 37/100, an average Economic Outlook score of 46/100, and an overall Propensity to Save and Invest score of 45/100.

Abrdn has called on the UK government to extend mandatory financial education to primary schools and to Sixth Forms in England to ensure fewer young people miss out on a financial education.

Abrd has also called for an integration of finance into relatable subjects, from maths, economics, citizenship and food tech.

Scotland already integrates personal finance across the curriculum, and Abrdn would like to see consistency across all four nations.

Abrdn would also like to see a discussion on a new GCSE and sixth form qualification that focuses on financial skills.

Sarah Moody, Chief Corporate Affairs and Sustainability Officer, Abrdn, said: “For decades, people in the UK have been encouraged to place property at the centre of their financial lives. If we are to avoid a looming retirement crisis, we now need to generate the same momentum behind saving and investing.

“Any future government should be urgently considering policy interventions – including the doubling of minimum pension contributions and scrapping stamp duty on UK shares and investment trusts – to kickstart the change in habits that the country will need in the years ahead.

“Better financial education is also vital if we are to encourage a culture of investing for the long-term, with our research suggesting that poor financial literacy is hampering people’s long-term financial health.”