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Pension savers restart contributions post-pandemic

Joanna Faith
Written By:
Joanna Faith

Most employees who reduced or stopped their pension contributions during the Covid crisis have restarted them, research reveals.

Three in five workers who cut their contributions at the height of the pandemic have now increased them again, according to Royal London.

One in ten who stopped paying into their pension altogether have restarted.

A survey by the pension provider last year found one in five people who contributed to a pension either reduced or stopped payments, with millennials most likely to pause or slash contributions.

Men are more likely to have restarted their contributions after stopping or reducing them, with 66 per cent doing so compared to 47 per cent of women.

The average current pension contribution – not including employer contributions – among those who had restarted or increased their payments was 4.9 per cent of their salary.

However, one in six (15 per cent) still think they are not paying enough into a pension for their retirement.

Nearly half (47 per cent) think they are paying enough but still need to increase their contributions, and a third (33 per cent) think their contributions are adequate.

According to the research, the older the participant, the less likely they are to have restarted their contributions after stopping or reducing them.

Three in four (77 per cent) of those aged 18-34 have since increased or restarted contributions compared to 51 per cent of 35-54-year-olds and 9 per cent of 55s and over.

Sarah Pennells, consumer finance specialist at Royal London, said: “There’s no doubt the pandemic caused people to rethink their financial priorities and last year we saw pension contributions facing a knockback. It’s great to see that people are rethinking their retirement priorities by increasing their pension payments.

“Although some people still think they’re not paying enough into their pension, it’s still encouraging to see some return to normal.

“However, it’s worrying that less than half of women have restarted their pension contributions, compared to over two thirds of men. We know that women retire on a lower income than men in retirement, so it’s vital they set aside money so they can have a good standard of living in retirement.”