VOLUNTARY pension contributions made by UK adults have almost halved in the past 12 months.
Research published today by pensions and insurance giant Prudential suggests people paying into company and private pension schemes have cut their contributions by a massive £134 a month compared with last year.
Increased outgoings, such as hig
her mortgage payments and utility and food bills, are being blamed for the slump.
The Prudential 2008 Retirement Savings Report found that non-retired UK adults said they were contributing an average £144.57 a month to private and company pension schemes – equivalent to just £1,734 a year. That compares with an average monthly contribution of £279.38 by UK adults questioned for last year's report.
Worryingly, the 2008 report also revealed that 55 per cent of non-retired UK adults do not contribute at all to a private or company pension scheme.
Gary Shaughnessy, Prudential managing director of retail life and pensions, said: "It is deeply concerning to see that the amount UK adults are personally paying into pension schemes has fallen so dramatically in the past year. With rising prices and a squeeze on savings, reducing pension contributions may look like an attractive short-term option, but the reality is that continuing to save as early as possible is vital if people are to build a pension pot large enough to maintain their lifestyle in retirement."
Reaction from other pensions companies to the Pru report was mixed.
John Lawson, head of pensions policy at Standard Life Assurance, said: "This sounds like complete bunkum. The tax relief granted by Her Majesty's Revenue and Customs has been on a constantly rising trend for both occupational and personal pensions. If tax relief is rising, then the average contributions must also be rising."
Rachel Vahey, head of pensions development at Aegon UK, said: "There's no doubt that the effects of the credit crunch, rising utility costs and recent stock-market volatility mean many people are beginning to feel the pinch. Pension contributions can seem an easy way to cut expenditure in the short term, despite the fact they are a very tax-efficient way of saving for the future."
The full article contains 362 words and appears in The Scotsman newspaper.
