One in five pension savers stop or cut contributions
Just under one in 10 (8%) chose to cut back on what they added to their pension pot, while 14% stopped adding to their retirement funds completely.
The study by Hargreaves Lansdown found younger people are more likely to take this action, with a third (31%) of 18-34-year-olds deciding to reduce or halt their pension contributions.
This compared to 20% of 35-54-year-olds, according to the poll of 2,000 people.
Men are also more likely to have changed their contributions (25%) compared to 18% of women.
However, 62% have not changed their approach to pension contributions, the study revealed.
‘Keeping up pension contributions is extremely important’
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Rising prices have made balancing budgets a real struggle and it’s no surprise that, after making all the cuts they can elsewhere, people are turning their attention to their pensions.
“Such actions are understandable – keeping up pension contributions is extremely important but, given the enormous pressure our finances have been under for such a sustained period of time, it makes sense if people are prioritising the here and now.
“The most important thing is to make sure that, when things get better, that you resume your pension contributions as soon as you can. Make a note in your diary at a regular interval to remind you to assess whether you can afford to restart, otherwise it may be something you don’t get round to doing.”
Morrissey added that other ways to rebuild a pension after a break is to make sure to increase contributions if you receive a pay rise or get a new job.
“Doing it straightaway means you don’t get used to having the extra cash. It’s also worth checking whether your employer operates a matching system where they will boost their contribution to your pension if you increase yours. This can really help you rebuild your pension planning after a difficult time,” she said.
The study comes after separate research revealed the cost to live a comfortable retirement has soared in the last year. Due to rising bills and inflation, the amount of extra money needed in pension pots for a ‘comfortable’ retirement has gone up by £68,700 since 2022.
Interactive Investor revealed that pensioners now need a total income of £47,700 in July 2023 for a comfortable retirement compared to £43,500 in April 2022. To bridge this £4,200 pension income gap, pensioners would need a private pension pot of around £598,700, an additional £68,700 compared with April 2022.
- More than 1.5 million over 50s consider skipping meals to keep up with cost-of-living crisis
- One in five using savings to make mortgage payments as rates soar
- Seven million households have struggled to pay their rent or mortgage in 2023
- Nine reasons to CHECK NOW if you need to register for self-assessment