More than one in two (51 per cent) of employers report that staff are now requesting to reduce pension contributions, with 47 per cent stating employees have asked for contributions to be stopped completely.
The findings, contained in LCP’s latest Financial Wellbeing report show a further 10 per cent said of employers said they expected to see this happen in the near future.
This survey shows how far pension saving has fallen down employees’ list of financial priorities amid a cost-of-living crisis. When asked about their financial priorities, employees said that budgeting and managing everyday money was their main priority. In contrast saving for a pension now ranked sixth, although it had taken the top slot in previous financial wellbeing surveys.
The survey also found that people are feeling financially vulnerable earlier in the pay cycle, with 21 per cent of employees reporting that they felt “concerned or negative” or couldn’t cope with their finances just days after payday. This number of people reporting these concerns rises to 32 per cent halfway through the pay cycle, and 45 per cent in the just before the next payday. All these figures are up by 10 percentage points when compared to last year’s survey.
In total 65 per cent of employees say they have borrowed money, up from 59 per cent last year. While 19 per cent said they had taken money out of their savings, 6 per cent said they had used a loan shark. LCP’s survey also found that more half (55 per cent) of employees surveyed said they have struggled to cope with daily life in the past year.
As a result LCP estimates that employees taking time off or spending work time dealing with personal issues now costs a medium-sized business (employing 2,500 people) around £1.1m per year
LCP senior consultant and head of financial wellbeing Heidi Allan says:: “There has been a lot of speculation that people will start to reduce or halt their pension contributions as they try and save elsewhere as life becomes more expensive. Our survey highlights that this is a trend that employers are starting to see and are expecting to increase.
“Of course, as inflation bites and energy costs remain high, it’s no surprise that people are prioritising saving for today rather than saving for tomorrow. It’s clear that financial issues are taking up an increasing amount of employee’s time and having an impact on businesses’ bottom line.”