A warning has been issued to employees in the UK after new research revealed the “significant” impact the cost-of-living crisis could have on pensions.
The research, conducted by the Pensions Management Institute (PMI), shows most retirement savers have so far continued to pay contributions to registered pension schemes, despite pressures on household incomes.
However, it also showed strong evidence that this is set to change.
The research shows that 13% of people have reduced their pension contributions in recent months, and a further 20% are considering doing so soon.
While almost 10% of people have already stopped their contributions altogether.
The PMI expects this number to continue to rise, possibly rapidly, particularly when the cost of Christmas and higher energy bills next year are felt.
PMI President Sara Cook said: “The pressures of meeting short-term needs for cash have forced many people to make decisions which could have serious implications for their longer-term financial security.
“Our research shows that a significant proportion of the General Public is saving at rates that are lower than they were twelve months ago.
“They are aware of the impact this will have but feel that they have no alternative. By reducing or stopping contributions altogether, savers will be subject to a ‘Double Whammy’ in that they will not enjoy the benefits of tax relief or employer contributions.
“Our research serves as an early warning that the public is finding it harder to take a longer-term view of retirement saving when short-term pressures have become so great.
“It is tragic that all the good achieved by automatic enrolment over the last decade might be undone by desperate people being forced to make short-term decisions at the expense of their longer-term security.
“Concern about the consequences for retirement of the current crisis was shared equally across all age groups, all income levels and all regions.
“The nation as a whole has lost confidence in its prospects for a comfortable retirement, and that is something that should alarm us all.”
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