One fifth of savers have reduced or stopped their pension contributions over the past twelve months, while a further 20 per cent are considering doing so over the coming months, according to research from the Pensions Management Institute (PMI).

The survey found that more than one in ten (13 per cent) of savers have reduced their contributions over the past twelve months, while 7 per cent have already ceased contributions all together.

Furthermore, although the findings suggested that most retirement savers have so far continued to pay contributions to registered pension schemes, there was "strong evidence" this may change in future, with 40 per cent of savers already feeling the impact of the rising cost of living.

Indeed, the PMI predicted a further increase in this figure, possibly rapidly, particularly when the cost of Christmas and higher energy bills are felt, with the Energy Price Guarantee for the average household set to increase from £2,500 to £3,000 in April 2023.

Reducing or cutting pension contributions has not been the only sign of the cost-of-living crisis, as the research also revealed that 17 per cent of respondents old enough to do so have withdrawn money from their pension savings to meet short-term needs.

In addition to this, over 75 per cent of workers were concerned that the cost-of-living crisis would have a detrimental impact on their plans for retirement, with 70 per cent believing that they would have to defer retirement.

In particular, workers typically thought they would need to work for an extra three years to due to the crisis, although over a quarter (28 per cent) believed that they would never be able to retire at all.

Commenting on the findings, PMI president, Sara Cook, stated: “The pressures of meeting short-term needs for cash have forced many people to make decisions which could have serious implications for their longer-term financial security.

“Our research shows that a significant proportion of the general public is saving at rates that are lower than they were twelve months ago. They are aware of the impact this will have but feel that they have no alternative.

"By reducing or stopping contributions altogether, savers will be subject to a ‘double whammy’ in that they will not enjoy the benefits of tax relief or employer contributions. Our research serves as an early warning that the public is finding it harder to take a longer-term view of retirement saving when short-term pressures have become so great.

“It is tragic that all the good achieved by automatic enrolment over the last decade might be undone by desperate people being forced to make short-term decisions at the expense of their longer-term security.

"Concern about the consequences for retirement of the current crisis was shared equally across all age groups, all income levels and all regions. The nation as a whole has lost confidence in its prospects for a comfortable retirement, and that is something that should alarm us all.”

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