Dramatic reduction in UK pension contributions

by Gill Montia

Story link: Dramatic reduction in UK pension contributions

Over the past year, UK workers have almost halved the amount they pay into their pensions.

Research from Prudential shows that employees were putting an average of £279 a month into their private or company pension schemes at this time last year, since when the figures has declined to £145.

According to Prudential, employees were not saving enough for a comfortable retirement before the recent fall in contributions and Gary Shaughnessy, a director of the Pru, says: “It is deeply concerning to see the amount that adults are personally paying into pension schemes has fallen so dramatically in the past year.”

Rising household bills and below-inflation pay rises are largely to blame, leaving many households with little choice but to reduce pension savings.

Of the 1,500 people questioned in the research, those with a pension said they anticipated retiring with a fund worth an average £22,500 a year.

However, to achieve this a 20-year-old male needs to save £286 a month until he is 65.

Prudential estimates that a 55% of the adult UK population is not saving towards retirement.

For women, the figure is worse, at 63%, most probably as a result of the child care commitments that leave many women in part-time work.

Pensions’ experts are warning of a “pension apartheid” which is developing because many public sector workers still belong to final salary schemes, which have all but disappeared in the public sector.