Savings gap -definition

A savings gap is a situation where the existing level of savings is insufficient to achieve an economic objective. In the UK economy and other developed economies, a savings gap refers to the gap between current savings for retirement and that necessary to generate a desirable income from retirement. It is also called a ‘pensions gap’.

In less developed economies a savings gap commonly refers to the deficit between current aggregate savings and the level of savings required to provide funds for business investment. This type of savings gap is also called a ‘savings-investment’ gap.