UK consumers considering reducing their private pension contributions has increased from 6 per cent to 10 per cent in a three-month period, according to Barnett Waddingham.
Research by Barnett Waddingham in December 2022 highlights consumer choices in the UK during the cost-of-living crisis. According to its findings, consumers that have been considering increasing their private pension contributions have increased from 6 per cent to 10 per cent while those considering cutting their workplace pension payments have remained at 6 per cent as opposed to 7 per cent before that.
Similarly, those considering drawing down from their pension have also stayed the same at 3 per cent.
Meanwhile, average earnings have increased from 6.1 per cent to 6.4 per cent, according to the Office of National Statistics.
Barnett Waddingham partner & head of DC Mark Futcher says: “Wage growth is rising, which the Bank of England expects to continue even as inflation comes down from its peak in the coming months. A silver lining here is that as wages rise, so too do pension contributions from both employees and employers. While many people have leant on their savings to keep up with the rising cost of living, there should be some relief that their often-unconsidered pension pot is rising without them noticing.
“Of course, we cannot expect people to be much heartened by better long-term savings when their short-term is still struggling. Inflation remains much higher than wage growth, so people are faced with a real-term rise in costs of bills, food, and fuel. This is leading to concerning financial decisions, including more people spending on their credit card, cutting back on their private pension, and even pausing their workplace pension contributions.
“Employers and trustees alike have a role to play in supporting people through this period of volatility. Good trustees must be communicating regularly and clearly with savers about their options; recent guidance from The Pensions Regulator mandates an especially strong focus on those close to retirement. Good employers have even more power; communication is key, but they can also offer tangible support to their staff in the form of increased pension contributions, private health insurance, and mental health support.”
