One in five UK adults (20 per cent) have either paused or are considering pausing their workplace pension contributions, while more than a quarter (27 per cent) would consider cutting contributions to increase their disposable income, according to analysis by Moneybox.

Moneybox’s Psychology of Retirement research highlighted the possible long-term cost of pausing pension contributions.

The analysis showed that pausing contributions for 12 months could increase the average earner's take-home pay by around £1,000.

However, it would also leave them more than £12,000 worse off in retirement, once lost contributions and potential compound growth were considered.

This is equivalent to almost a year's living costs for a single person on a minimum retirement lifestyle, as defined by Pensions UK’s Retirement Living Standards.

According to the research, only 35 per cent of respondents recognised the importance of time and compound growth in building long-term pension savings.

The firm said the findings demonstrated the potential influence of 'present bias', which is savers’ tendency to prioritise greater rewards today over potentially greater benefits in the future.

Moneybox head of personal finance, Brian Byrnes, commented: "When household budgets are stretched, an extra £80 or £100 in your monthly pay packet can understandably feel much more valuable than money you won't access for decades.

“But our analysis shows just how unequal that trade-off can be.”

Byrnes recommended that if savers do need to pause or reduce pension contributions, they should treat it as a “temporary measure” and review what they are contributing when circumstances improve.

He explained that even small increases in contributions can make a difference over the long-term, particularly if their employer offers contribution matching.

He added that savers should review the performance and fees of any old workplace pensions and consider consolidating old pension pots, where appropriate, to make them easier to manage.

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