Nearly half (47 per cent) of those not yet retired cannot afford to save more into their pension due to the rising cost of everyday living, a survey from the Pensions and Lifetime Savings Association (PLSA) has revealed.

The survey showed that savers are taking stock of their finances, however, with nearly a third (31 per cent) spending time over Christmas to review their pension, increasing to 41 per cent amongst 18-34 year olds.

In addition to this, the PLSA found that, “positively”, around a third (32 per cent) of workers could afford to contribute more to their pensions now in order to boost their retirement income, while 78 per cent believe that it is a good idea to pay into a workplace pension.

Furthermore, around 41 per cent of respondents agreed that pension contributions should rise from the current level of 8 per cent up to 12 per cent, with only 16 per cent disagreeing with the proposal.

However, a lack of pension knowledge continues to present a barrier to engagement, as only a third of people correctly knew the minimum contribution rate that people make via automatic enrolment.

In addition to this, 39 per cent of savers were not sure if the government gives tax relief on their pension contributions, and 31 per cent were unsure if their pension savings are invested in stocks, bonds, or other investments.

Commenting on the findings, PLSA director of policy and advocacy, Nigel Peaple, emphasised that whilst savers faced "substantial financial difficulties" over the short term due to the Covid-19 pandemic, they can see the value of the saving towards retirement over the longer term.

“Moreover, while half of those responding to our survey say they cannot afford to save more now, a third do consider themselves able to do so," he continued.

“Many people do not fully understand the complexities of pension saving so it is important that the government’s policy on pension saving takes account of this."

In particular, Peaple suggested that, alongside industry measures like the Retirement Living Standards, the rules of automatic enrolment should be designed to give people an adequate income.

“We, therefore, support the government’s promise to extend pension saving to younger people in the mid-2020s and to increase the amount of saving so that it is on the first pound of salary," he said.

“But it is also important that the government “levels-up” pensions so that, by the end of the decade, pension contributions are increased from 8 per cent to 12 per cent, split evenly between employers and employees.”

Whilst the government has previously committed to implementing auto enrolment reforms in mid-2020s, it has also faced renewed calls to outline a more firm timetable for the work after a Private Members Bill on the reforms was introduced to parliament.

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