35% of British workers have stopped paying into their pension

A leading insurer’s (Prudential) study found that 35% of British adults who are to retire have stopped paying into pension schemes, citing unemployment and affordability as the main reasons.

More than 40% of those who have stopped making contributions do not plan to start again, despite the impact it will have on their retirement income.

Tightening your belt when times are hard is sometimes necessary, and putting pension contributions on hold might seem an easy way to save money; however, neglecting pension contributions today could mean throwing money away tomorrow, as you will miss out on tax relief and potentially employer contributions.

A different insurer’s (LV=) research shows that a third of people aged 50 or more plan to use their home as their pension. LV= quote two million people over the age of 50 intend to use equity from their homes to boost their retirement income, compared to one-and-a-half million in 2010.

Half of those questioned intend to do this by downsizing to a smaller home, a fifth plan to move to a cheaper area, and a further fifth will use equity release schemes.

Also, only a fifth of those surveyed believed they were financially on track to retire as planned. More than a third (36%) think they will need to delay their retirement for financial reasons, while 16% would rather not contemplate their post-work finances at all.

Nearly half (45%) of those approaching retirement are considering alternative sources of income after they finish working.

According to the Office of National Statistics, contributions to personal and stakeholder pensions have also fallen by 10% during the past two financial years as the recession tightened individuals budgets. Personal and stakeholder pensions are flexible, allowing people to make contributions when they have money available and stop in times of hardship.

If you are concerned about your retirement income, contact us today to find out how we can help.