One in 20 pausing pension contributions amid cost-of-living crisis

One in 20 (5 per cent) UK adults have stopped contributing into their company pension as a result of the cost-of-living crisis, according to research from Canada Life.

The survey also found that around 6 per cent of UK adults are actively thinking about pausing their pension contributions, while a further 9 per cent might consider doing so in the future.

This could prove detrimental for savers, as analysis by Canada Life found that opting out of a company pension for just one year could reduce the value of a saver's pension by 4 per cent, all other things being equal.

This was based on someone earning £50,000 a year and paying a contribution of 8 per cent.

Commenting on the findings, Canada Life technical director, Andrew Tully, noted that the rising cost of living crisis is putting an "incredible amount of strain" on people’s finances.

He continued: "With economists expecting inflation to peak into double digits later this year, the squeeze on the nation’s finances will only get worse.

“It’s understandable that people who are really feeling the pinch are considering opting out of their pension. Affording food and heating in the present day will always take priority over saving for the future.

"However, it’s important that anyone who does decide to opt out of their pension remembers that they can choose to re-join the scheme as their financial situation improves.

“It’s worth remembering if you are in a company pension scheme you can often only choose to stop or start contributions once a year, and you will miss out on valuable top ups from your employer and the government.”

Industry experts have previously raised concerns over the potential impact of the cost-of-living crisis on pension saving trends, with some warning that this could prove to be automatic enrolment's "biggest test" to date.

In addition to this, concerns have been raised that the cost-of-living crisis could put pension freedoms progress at risk, with the return of high inflation and cost-of-living concerns challenging thinking for both consumers and advisers.

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