Just one in 20 (5 per cent) of people who saved money due to Covid-19 restrictions plan to pay the money into their pensions, according to research from LV=.

The provider’s quarterly Health and Wellbeing Monitor survey found that 72 per cent of people had managed to save money during the pandemic because of reduced spending on commuting, childcare, eating out and going on holiday.

Among those who managed to save money, the average amount they saved was nearly £5,500 during the past 12 months, with 8 per cent stating that their household saved over £10,000.

However, pensions were one of the least favoured locations for this extra cash, being well outstripped by the popularity of savings accounts and cash ISAs, which 28 per cent of respondents placed their money in.

Just over a fifth (21 per cent) will use the extra money to book a holiday, 19 per cent have picked home improvements, 13 per cent are using it for living costs and 12 per cent want to use the money for essential home or vehicle repairs.

Other options which proved more popular than pensions included non-essential everyday spending (11 per cent), paying off loans (10 per cent), investments or stocks and shares ISAs (8 per cent), a deposit on a home (7 per cent), investing for future generations (6 per cent) and buying a vehicle (6 per cent).

People with non-property assets of between £100,000 and £500,000 were more likely to have invested in pensions than the general population, with 8 per cent having put their extra cash towards retirement, and were twice as likely to have put their savings into long-term investments.

LV= managing director of savings and retirement, Clive Bolton, said: “LV=’s research indicates that much of the accumulated saving has been concentrated among relatively well-off households.

"The UK has been divided into two groups: those who are struggling on reduced incomes, and those whose income has remained stable and whose costs have been greatly reduced.

“The past 12 months has been tough for many, especially for those who have been put on furlough, made redundant or who are self-employed.

"However, those people who have remained in work have been able to save large sums as large expenses such as holidays, commuting costs, childcare and entertainment have vanished.

“LV=’s next wave of research will give an indication about how the end of lockdown will change spending and saving patterns.”

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