Pensions - Articles - 1 in 5 stop or cut contributions due to cost of living

 Helen Morrissey, head of retirement analysis at Hargreaves Lansdown: “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. More than one in five people say they have either stopped or cut back their contributions because of the cost-of-living crisis, with men and younger people most likely to do this.

 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. Recent findings from the HL Savings and Resilience Barometer showed one in four (26%) are spending more than we are earning and risk racking up debt as a result.

 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. Auto-enrolment means you will be re-enrolled every three years but, ideally, you don’t want to spend three years not saving for retirement unless you really must. It also won’t pick up those people who have cut their contributions rather than stopped them and face being stuck at a lower contribution level for longer than they had planned.

 Other ways to rebuild your pension after a break is to make sure you 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.”