More than one in five people have stopped or cut back pension contributions as a result of the cost-of-living crisis according to new figures.
The research, by Hargreaves Lansdown, found 14 per cent of savers had stopped contributing to a pension altogether, while a further 8 per cent had reduced contributions.
Men were more likely to have made these changes, with 25 per cent reducing or stopping contributions, compared to just 18 per cent of women.
This is also a particular issue for younger savers, with 31 per cent of those under 34 cutting back on these long-term savings.
However, while many people are reducing pension savings the research found six out of 10 (62 per cent) have managed to maintain payments into their pension plan despite the squeeze on income from rising food and fuel prices and higher interest rates.
Hargreaves Lansdown, head of retirement analysis, Helen Morrissey, says: “Rising prices have made balancing budgets a real struggle and it’s no surprise that after making cuts elsewhere people are turning their attention to their pensions.”
She points out that while long-term pension saving is important, recent findings from HL’s savings and resilience barometer show one in four people are spending more than they are earning. Reducing pension saving may be preferably to racking up expensive short-term debts she adds.
Morrissey points out that more should be done to ensure people restart savings into pensions as soon as their financial situation improves, particularly as employees won’t be automatically re-enrolled into their workplace pension for three years. Similarly these AE mechanisms won’t pick up people who have reduced contribution and revert them to their previous level.
Unless people take action she says many could end up outside a pension for a number of years or paying lower levels for far longer than they had planned. Employer matching schemes and better engagement via workplace pensions can help she added.
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