Almost one in four (23 per cent) working adults have reduced their pension contributions as a result of the cost-of-living crisis – with one in 20 (5 per cent) stopping contributions entirely according to new research from the Pensions Management Institute (PMI).
The research highlights the impact current economic conditions are having on people’s retirement plans. Alongside the significant number now paying less into pensions, a further 24 per cent of those surveyed said they will delay their retirement as a result
In total one in two adults said they have had to change their retirement plans in response to the cost-of-living issue.
PMI council member, Tim Box says: “Our research shows the concerns that many people have about how well they can prepare for retirement.
“With only 30 per cent of our respondents believing that the state pension will be more than half of their retirement income, the role of private pension provision to fill the gap is critically important. If the state pension age is to be raised to 71, as has recently been speculated, then private pension savings are likely to be the only source of income between stopping work and the commencement of the State Pension for a huge swathe of those born after 1970.”
Two-thirds of those surveyed felt that they did not have the knowledge required to choose their pension provider despite nearly 60 per cent showing some interest in being able to choose their own provider.
The PMI says these findings are relevant, given the government’s recent lifetime provider (‘pot for life’) proposals, and show the vital importance of improving financial and pension education throughout society before implementing such a radical change.
Savers also value retirement benefits in the form of an income stream rather than a cash sum. A total of 58 per cent planned to take retirement benefits totally or mainly as an income, with just 25 per cent interested in taking their pension savings totally or mainly as cash. The PMI research found that 81 per cent of respondents valued a retirement income that would be guaranteed for life, with two-thirds attracted to an income that kept pace with price inflation.
