High cost-of-living pressures have not stopped UK savers paying into their pension, according to research from industry body Pensions UK.
Research with 2,082 working age adults, conducted on behalf of Pensions UK, found that while 44 percent of people say their financial situation is worse than 12 months ago, only 4 percent have reduced their workplace or private pension payments.
The proportion of people reporting worsening finances climbed from 34 percent in 2024 to 44 percent this year.
Many households are making cutbacks, with 39 percent reducing the amount they eat out, 35 percent having fewer takeaways, and 32 percent reducing holiday spending. A similar proportion (31 percent) have slashed savings contributions, but pension savings have largely been protected.
Savings reform
The survey also highlights a strong public appetite for pensions reform that makes saving easier and improves outcomes.
Nearly two-thirds (65 percent) of respondents agree people should be encouraged to make higher contributions. And almost nine in ten (87 percent) expect the government to ensure pensions deliver good value for money.
Six in ten (61 percent) want all pensions automatically combined, and over three quarters (77 percent) want to see all their pensions in one place.
Nearly eight in ten (79 percent) believe people should be able to easily choose how their pension is invested.
Many of these preferences reflect measures in the government’s forthcoming Pension Schemes Bill, which includes plans to tackle the large number of small pensions, introduce a value-for-money framework, and support guided retirement products.
Zoe Alexander, executive director of policy and advocacy at Pensions UK, said the findings underline the importance of automatic enrolment and long-term financial planning.
“Households are under pressure, but what really stands out is that people are continuing to save through automatic enrolment, and indeed 65 percent of people believe contributions should go up.
“This demonstrates both the value people place on retirement security and the power of automatic enrolment. It puts the onus on politicians and industry, and the current Pensions Commission, to make sure the system works well for as many savers as possible. Pensions UK will be supporting the commission through its own research on automatic enrolment system design.”
She added: “Encouragingly, many of the reforms in the Pension Schemes Bill, such as action on small pots, guided retirement products and a new value for money regime, reflect what the public want and what Pensions UK has long called for.”
Low confidence
The research also shows widespread concern over the adequacy of the state pension. Only 18 percent of respondents believe the full state pension of around £12,000 a year is enough to live on, while 62 percent disagree.
There is overwhelming support for maintaining its value, with 89 percent agreeing that it should always rise with the cost of living.
When asked which issues should be top of the government’s pensions agenda, respondents prioritised keeping the state pension rising with inflation (58 percent) and ensuring it is enough to live on (56 percent). Other priorities included simplifying pension tax rules (28 percent) and improving financial education for young people (26 percent).
Alexander said: “Our research shows that people want government to focus on protecting the value of pensions and helping them grow steadily over time. Decisions about how pensions invest should always be based on what is best for savers, not short-term policy aims, otherwise people could face unnecessary risks. The best way to deliver strong outcomes is for schemes to make investment decisions in the long-term interests of members.”
