More than one in 20 (7 per cent) workplace pension holders plan to reduce their contributions to help them weather the cost-of-living crisis, analysis from Barnett Waddingham has found.

The consultancy firm noted that this was the equivalent of more than a million people.

Younger people were found to be more likely to be considering reducing pension contributions than other age cohorts, with nearly one in five (18 per cent) of 18-24 year olds saying they were planning to do so.

Barnett Waddingham said that the trend of younger people looking to reduce contributions was particularly worrying, as it was vital they continued to lay the foundations for a stable financial future.

The research also revealed that 3 per cent of people aged 55 and above with a pension planned to draw down their pension to keep up with the rising cost of living.

Barnett Waddingham warned that, as most people are already not saving enough into their pensions, these developments could have a “profound impact” on their financial resilience.

It encouraged employers to explain the level of contribution needed to fund a comfortable retirement.

However, the research found that workers seemed hesitant to turn to their employers for support with the rising cost of living, with just 6 per cent of employees saying they would ask for a pay rise.

Younger people appeared more confident in negotiating on pay, however, with 15 per cent of those aged 18-34 willing to ask for a pay rise.

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