Figures from a UK Cost of Living survey have been branded as ‘concerning’ from a workplace pension perspective, as the Financial Conduct Authority(FCA) has unveiled stats that show people are cutting back on their workplace pensions to save money.
The FCA’s latest Financial Lives survey had 3,450 respondents and found that as 11% say they have ‘no disposable income’ an increasing number are slashing their workplace pension contribution in a bid to have more available cash.
It was found that three per cent had stopped putting money into their pension, an increase from previous years. Legal & General have said this means employees are missing out on ‘free cash, tax relief and investment growth’.
Katharine Photiou, Managing Director of Workplace Savings, Legal & General commented:
“Cutting back or stopping pension contributions can have long-term financial implications for people, so these latest FCA figures are concerning. From a workplace pension perspective, it can mean you miss out on free cash from your employer contributions, tax relief and the potential for investment growth. Although on the surface it might seem like you are saving money, reducing contributions or opting out could actually cost you a lot.
“It can often be better to look to reduce spending elsewhere, though we fully appreciate for some people this may not be an option. It’s essential to make a well-informed decision on pensions, so we urge anyone struggling to make the most of the free financial guidance available, including services like MoneyHelper, to find the best solution for them.”
Almost half of people surveyed (44%) have stopped or reduced saving or investing to make ends meet, while 23% used their savings or investments to cover day-to-day expenses.
