Almost one in 10 people (7 per cent) are planning to reduce workplace pension contributions to help them cope with the rising cost of living.
This research from Barnett Waddingham suggests that this means more than 1m people will be reducing pension contributions.
Worryingly, the research found that twice as many younger people were looking to reduce pension payments, with almost one in five (18 per cent) of those aged 18-24 plan to pay in less.
The research highlighted other ways people are looking to save money to help with rising everyday bills, with 19 per cent of respondents saying they are already cutting out everyday luxuries, such as subscriptions.
However more are reducing savings and investments. A quarter of respondents said that they had already dipped into savings to cope with price rises. This is especially true of those aged 55+ (29 per cent), and more true for women than men (28 per cent vs 25 per cent). Barnett Waddingham warns this could affect longer term financial security and ambitions.
For those without savings, the situation is bleaker; almost one in 10 people (9 per cent) are increasing their use of credit cards, and 7 per cent are paying more using ‘buy now, pay later’ schemes. The increase in credit card spending is true of 16 per cent of 18–34-year-olds, raising the spectre of debt misery in years to come.
As the cost-of-living crisis continues, Barnett Waddingham’s research suggests it could push people to use funds earmarked for retirement planning to supplement increased costs too. A total of 3 per cent of those aged 55+ with a pension plan to draw down their pension to keep up with the rising cost of living.
It says that as most people are already not saving enough into their pensions, these developments could impact our future financial resilience.
Barnett Waddingham says this makes it more important than ever that employers explain the level of contribution needed to fund a comfortable retirement. Yet, employees appear hesitant to turn to their employers for support with the rising cost of living. Just 6 per cent of employees said they would ask for a pay rise to keep up with the cost-of-living. Although the figure rises among younger workers, with 15 per cent of those aged 18-34 willing to negotiate on pay.
Barnett Waddingham, head of DC Mark Futcher says: “The cost-of-living crisis has forced many people to take a long hard look at our finances. But while there’s clear merit in doing some financial spring cleaning, cutting back on financial planning commitments could have a dramatic impact on long-term financial wellbeing.
“At a time of significant financial hardship, it’s important employers do their bit to help employees keep their heads above water. At a basic level this means providing stronger financial guidance for employees and encouraging them to think twice before making knee jerk decisions with their finances.
“Better still would be to help valued employees shoulder the financial burden by upping employer contributions to workplace schemes and even considering continuing to pay employee contributions if an individual needs to pause contributions temporarily. “
