One in three (33%) employees have thought about lowering or terminating their pension contributions in the last two years, this number rises to nearly half (49%) among those aged between 18 and 34, according to Royal London.
According to new data from Royal London, which polled more than 6,000 UK adults, workers who cease contributing can miss out on employer matching, which occurs when firms match pension payments if the employee contributes more.
The research found that stopping pension contributions might increase take-home income by about £1,404 annually, but it would cost workers making £35k a year £4,092 in pension savings.
Additionally, it was found that 10% of pension savers are decreasing the amount they contribute to workplace savings.
It identifies growing mortgage prices, 15%, and the cost of living, 55%, as two main causes.
Royal London senior pensions development manager Justin Corliss said: “It will come as a surprise to many just how much you stand to lose by opting out of your workplace pension for one year.
“With the cost of living, driven in particular by mortgage payments and rent, ramping up, workers across the earnings spectrum are having to juggle their finances. However, the decision to pause pension contributions is one that needs to be weighed up carefully, especially for those at the start of their career.
“Stopping or reducing contributions might be necessary for some, but it’s vital that decisions aren’t taken on a whim. The figures show that the money gained in the short term doesn’t appear great value when compared to what’s being given up in the longer term.”
