Average Savings Rate UK: What the ONS Data Actually Shows

# Average Savings Rate UK: What the ONS Data Actually Shows

The top income quintile in the UK saves around 20–25% of household income. The bottom quintile saves close to zero — and in some years records a negative savings rate, meaning expenditure exceeds income. That gap tells you more about UK household finances than any single average figure can.

This article pulls from the ONS Living Costs and Food Survey (LCF), which tracks detailed income and expenditure data for roughly 5,000 UK households each year. The numbers below reflect pre-pandemic and post-pandemic patterns where data is available.

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## What the average savings rate UK data actually shows

The UK household savings ratio — published quarterly by the ONS as a national accounts figure — fluctuated between 4% and 9% in the years immediately before the COVID-19 pandemic. It spiked to above 25% during 2020 when spending opportunities collapsed, then fell sharply as pent-up demand was released. By 2023–24 it had settled back into a range of roughly 8–11% at the aggregate level.

That aggregate figure, however, is an average across all households weighted by income. Because higher-income households save more in absolute terms and represent a disproportionate share of total income, the aggregate ratio is pulled upward relative to what a median household actually experiences.

The LCF microdata gives a cleaner picture by quintile:

- **Bottom quintile (lowest 20% by income):** Savings rate near 0%, often negative. Average weekly household income around £250–£320; average weekly expenditure frequently exceeds this.
- **Second quintile:** Savings rate roughly 2–5%. After housing, food, and transport, little remains.
- **Middle quintile:** Savings rate around 5–10%. This is where genuine discretionary saving starts to appear.
- **Fourth quintile:** Savings rate roughly 10–15%. Pension contributions begin to make a material difference here.
- **Top quintile:** Savings rate in the range of 20–25%+. This group holds the majority of financial assets and drives the aggregate figure upward.

These figures include pension contributions (both employee and employer). Strip out employer pension contributions and the effective savings rates drop by 2–5 percentage points across most quintiles.

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## How UK savings rates compare by region and city

The LCF data breaks down by region, and the differences are material. London households report higher incomes on average but also higher expenditure — particularly on housing. Median private rent in London sits around £1,950–£2,100/month for a one-bedroom flat as of 2024, compared with £750–£950 in cities like Leeds, Sheffield, or Liverpool.

The result is that London households at median income levels often achieve lower savings rates than equivalently paid households in lower-cost regions, simply because housing consumes a larger share of gross income. A household earning £55,000 gross in London faces very different financial arithmetic than one earning the same in Manchester.

South East England tends to show slightly better savings rates than London because incomes are comparable in many commuter belt areas but rental and housing costs, while elevated, are not at London extremes. Scotland, Wales, and Northern Ireland typically show lower average incomes but also substantially lower housing costs, with savings rates in the middle quintiles broadly similar to the national median.

If you want to see how your savings rate benchmarks specifically against other households in your city, [Savings rate in London](https://pathverdict.com/financial-position/london) provides a city-level breakdown.

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## The biggest drags on UK household savings rates

Housing is the single largest expenditure category for most UK households. The LCF data consistently shows that housing costs (rent or mortgage interest plus associated costs) account for 25–35% of total household expenditure for renters, and 15–25% for mortgaged owner-occupiers. Outright owners, typically older households, face far lower housing cost burdens.

After housing, the largest expenditure categories are:

1. **Food and non-alcoholic beverages:** Roughly 11–14% of expenditure across most quintiles. In absolute terms this is relatively flat across income levels, so it represents a much larger share for lower-income households.
2. **Transport:** Around 12–14% of total expenditure. Car ownership costs (fuel, insurance, depreciation) dominate outside London; public transport costs are significant within it.
3. **Recreation and culture:** Approximately 10–12% for middle and upper quintiles — one of the more income-elastic categories.
4. **Restaurants and hotels:** Around 8–10% for middle quintiles.

Energy costs have become a larger drag since 2021–22. The Ofgem price cap increases pushed energy from around 3–4% of household expenditure to 6–8% for lower-income households at the peak, compressing savings capacity significantly.

Understanding [what's a good savings rate](https://pathverdict.com/blog/what-is-a-good-savings-rate) requires putting these category pressures in context — a 5% savings rate looks very different on a £25,000 income than on a £75,000 income.

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## Pension contributions and how they distort the picture

Most discussions of savings rates in the UK undercount savings because they focus on take-home pay and cash ISAs while ignoring pension flows. Under auto-enrolment, employees contribute a minimum of 5% of qualifying earnings and employers contribute at least 3%. For anyone enrolled in a workplace scheme, this alone accounts for 5–8%+ of gross earnings being saved before any conscious decision is made.

The implication is that many households appear to save little from their current accounts but are accumulating substantial pension wealth. The LCF methodology captures pension contributions as part of household saving, which is why the middle-quintile figures (5–10%) look more respectable than a simple bank-balance analysis would suggest.

For higher earners in defined contribution schemes or those making additional voluntary contributions, pension savings can push total savings rates to 15–20%+ even when day-to-day discretionary saving is modest.

This is worth keeping in mind when you benchmark your own position. [How we calculate savings benchmarks](https://pathverdict.com/methodology) explains the methodology PathVerdict uses, including how pension contributions are treated in the calculation.

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## Frequently asked questions

### What is the average savings rate in the UK?

The aggregate UK household savings ratio runs at roughly 8–11% of gross disposable income in normal economic conditions, based on ONS national accounts data. However, this figure is skewed upward by high-income households. The median household — around the middle quintile of the income distribution — saves closer to 5–10%, with pension contributions accounting for a significant portion of that.

### How does the UK savings rate compare to other countries?

Germany and the Netherlands consistently record higher household savings rates — typically 15–18% — reflecting cultural norms, stronger social insurance systems that reduce precautionary saving needs in some respects, and lower household debt levels. The US records a savings rate broadly similar to or slightly below the UK at 5–9% in most recent years. Australia and Canada sit at roughly comparable levels to the UK. France tends to run higher than the UK at 12–16%. These cross-country comparisons require caution because methodologies differ.

### What savings rate should I be aiming for in the UK?

There is no universal target, but a commonly cited rule of thumb is 15–20% of gross income including pension contributions. Below 10% — particularly if pension contributions are modest — leaves little margin for financial shocks or early retirement. [Am I saving enough?](https://pathverdict.com/blog/am-i-saving-enough) works through the question in more detail with income-specific benchmarks.

### Does the UK savings rate include ISA contributions?

The ONS household savings ratio captures all forms of saving, including ISA contributions, pension contributions, and net repayment of debt principal. Cash sitting in a current account is not counted as saving unless it results in a net increase in financial assets. ISA contributions are included as saving in both the national accounts measure and in the LCF survey methodology.

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## Where your savings rate actually sits

The ONS data makes one thing clear: the average savings rate UK households report varies so widely by income, region, and age that a single headline figure is almost meaningless as a personal benchmark. What matters is how your rate compares against households with similar income and cost structures.

[PathVerdict](https://pathverdict.com/) lets you enter your income, rent, and monthly expenses and benchmarks your savings rate against LCF survey data — including city-level comparisons across 92 cities in 21 countries. It takes under 30 seconds and requires no sign-up. If you want a clear read on whether your current savings rate is critical, under-saving, or ahead of the curve relative to actual household data, check your financial position at pathverdict.com.