Pension contributions plummet

Almost one in five (18 per cent) of UK workers say they have reduced the amount they save for an occupational or private pension as a result of the credit crunch, according to research by Prudential. Of these people, more than one in three (36 per cent) do not anticipate they will be able to increase the amount they save into a pension in the future.

Contributions

Voluntary pension contributions to private and company schemes have plummeted by 53 per cent in just 18 months as the current economic downturn forces UK adults to cut monthly pension savings from an average £279.38 a month in March 2007 to just £129.35 a month today.

The findings also reveal that UK workers on average are saving just £1,552.20 a year into pension funds with women saving even less, around £74.95 per month or £899.40 a year.

In addition, more than half of all UK workers (55 per cent) do not contribute to a company or private pension, leaving them completely reliant on the State pension or other savings.

Downward Trend

The results compare to previous Prudential studies, the last of these conducted in March 2008 found that pension contributions had fallen by half from their March 2007 level of £279.38 a month to an average of £144.57 a month, and the latest figures demonstrate that contributions have continued to fall still further from March to September 2008.

Martyn Bogira, Defined Contributions Director, Prudential states: "It is staggering to see how much UK pension contributions are being scaled back as people look to reduce their outgoings but while a pension fund may seem a relatively pain free way to increase disposable income today, the impact of this in retirement will be significant."

"We would urge people to think carefully before cutting pension contributions as it is vital that they build a strong savings pot to ensure they are in the best position possible to enable them to enjoy a comfortable retirement."