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Pensions put on ice as finances are squeezed

Pensions put on ice as finances are squeezed

Category: Pensions

Updated: 22/11/2011
First Published: 28/09/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

A large minority of people who have yet to retire have stopped paying into their pension pots, new figures have revealed.

The results of Prudential's research show that one in three (33%) of those who have put pension payments on hold have done so because they are out of work, while over a quarter (27%) say that they can no longer afford the contributions.

More than two-fifths (43%) of those who have stopped paying into their pensions do not plan to start again, despite the long-term impact it will have on their retirement income.

Figures show that irregular contributions could reduce the values of savers' pensions by thousands of pounds.

In fact, a saver who misses a year of gross contributions of £2,400 could see their final pension fund reduced by £7,000.

"Tightening your belt when times are hard is sometimes necessary, and putting pension contributions on hold might seem an easy way to save money; however, neglecting pensions today means throwing money away tomorrow, as savers will miss out on perks, such as tax relief and employer contributions," Vince Smith-Hughes, head of business development at Prudential,said.

"Abandoning your pension pot really should be a last resort when times are tough.

"By getting into the routine of saving into a pension as early as possible, savers will be able to ensure the comfortable retirement that they deserve."

The figures are likely to concern the Government ahead of its plan to roll-out an auto-enrolment workplace pension scheme over the next five years.

The initiative will offer workplace pension to employees that do not currently have the option to save into a pension

However, these figures suggest that many could choose to opt-out of the scheme.

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