Approximately one in 15 people (7 per cent) plan to reduce their workplace pension contributions to keep up with the increased cost of living, according to research by Barnett Waddingham.

Younger people were found to be the most likely to consider decreasing their contributions, with almost one in five (18 per cent) planning to do so.

Barnett Waddingham’s research also suggested that the cost-of-living crisis could push people to use funds earmarked for retirement planning to supplement increased costs.

It found that 3 per cent of pension holders aged 55 and older planned to draw down their pension to keep up with the rising cost of living.

The consultancy noted that as most people are already not saving enough into their pensions, these developments could have a “profound effect” on their financial resilience.

It added that this makes it even more important that employers explain the level of contribution needed to fund a comfortable retirement.

“The cost-of-living crisis has forced many people to take a long hard look at our finances,” commented Barnett Waddingham head of DC, Mark Futcher.

“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 that 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.”

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