Are you one of the six million Covid-19 ‘accidental savers’?

Pandemic means many of us are hoarding cash, but not always putting it to good use.

The pandemic has helped create a new wave of ‘accidental savers’, but that money isn’t necessarily being put to the best use, research shows.

Almost a full year of remote working and lockdown restrictions during the coronavirus outbreak has meant less money spent on commuting and lunchtime sandwiches, as well as fewer holidays.

Financial consultancy LCP estimates that more than six million workers have found themselves saving more as a result of the pandemic.

They tend to be on higher incomes and able to work from home, so have reduced their travel and employment-related costs.

Many have also saved money by spending less on holidays and eating out. LCP estimates savers could have managed to put away thousands of pounds of extra money.

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The Bank of England’s own estimates show that in the period March to November 2020 alone, households accumulated £125 billion more in savings than would have been expected, with more likely since then.

But just because extra money has been saved, that doesn’t mean it is necessarily being put in the best place.

LCP found that accidental savings have ended up in a bank account or short-term savings account, with relatively little used to boost long-term savings, such as pensions.

Steve Webb, partner at LCP said: “Many people who have built up balances have not yet committed them to long-term savings, and many pension schemes and providers do not make it easy for members to make one-off contributions.

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“A concerted effort is needed to use this unexpected opportunity to create more of a savings culture, especially among those who may permanently benefit from reduced outgoings as a result of a switch to greater home working.”

Rachel Springall, finance expert for Moneyfacts, says it is uncertain how long the accidental savings trend will last once lockdown restrictions ease.

She says: “There will be those who have had a mindset change about the value of money and why it’s important to prepare for financial uncertainty. Building a savings pot and having enough funds to cover a few months of essentials is a good start.

“Interest rates are at record lows and savers may well be prioritising access over securing a top rate, such as choosing an easy-access account where they can quickly gain access to their savings.”