Pension savers cut back contributions because of pandemic financial uncertainty

Workers stopped their pension contributions as the economic consequences of Covid-19 hit home, analysis has shown.

One in four respondents to a survey by pension firm Hargreaves Lansdown carried out at the start of the month said they had either reduced the amount they save into their workplace pensions or had stopped payments entirely.

A further eight per cent said they planned to do so in the future, fueling fears that coronavirus could cause millions to fall behind in their retirement savings. Younger people were the most likely to have stopped saving.

Sarah Coles, from the firm, said: “It’s worth doing what you can to keep paying into your pension throughout your career. The money you put in when you’re younger works the hardest for you.”

Several reports have highlighted the unequal financial impact of the pandemic with some families finding their budgets squeezed by unemployment or furlough while others have been able to save money by cutting out the commute and not going out.

The news comes ahead of Wednesday’s announcement of the inflation figure for September which is expected to confirm that retirees will receive a 2.5 per cent increase to their state pension.

Payouts are increased by the higher of earnings, inflation or 2.5 per cent each year because of the triple lock.

Tom Selby, of pension firm AJ Bell, said that, although the policy is safe for now, a review was “inevitable” after the surge in Government spending on battling coronavirus.

Meanwhile the Government has confirmed that it intends to introduce a pension “statement season” meaning firms would need to send savers their annual documents for review at a specified time of year.

Currently providers decide when to send their customers the information, meaning it could arrive at different times of year depending on the saver.

Steven Cameron, of Aegon, said the move would help people keep track of and compare their different pots but could create logistical issues for companies.