Around one in six 'mass-affluent' adults have either stopped or paused workplace pension contributions in the past year, research by Raymond James has found.

The study of adults with a pre-tax salary of at least £39,000 and £1,000 in accessible cash or savings, revealed that 10 per cent had completely stopped contributing to their workplace pension over the past 12 months, while a further 7 per cent had temporarily paused contributions.

Meanwhile, 10 per cent reduced their pension contributions in the past year, while 29 per cent increased contributions and 7 per cent made a lump-sum payment.

The most common reason for stopping or reducing pension contributions was rising living costs, reported by 20 per cent of those who had cut contributions, followed by building emergency savings (18 per cent).

Other reasons included travelling, prioritising savings over investing, pursuing side projects and paying off mortgages.

Some respondents cited career breaks, having children, and 10 per cent mentioned concerns about the impact of the Middle East conflict on their investments.

The firm said that stopping pension payments can provide a short-term increase in take-home pay, but it can also reduce long-term retirement savings by forfeiting the benefits of compounding over time, employer contributions and tax relief.

Commenting on the research, Raymond James director of financial planning, Harry Bell, said: “Pensions are one of the most important and effective tools for securing financial stability in later life.

"But with more than one in six either completely or temporarily stopping their workplace pension contributions in the last year alone, this raises major red flags. Even more so for those currently in full-time employment.

He said that making “survival-based financial decisions", which may seem sensible in the near-term with retirement feeling a long way off, can have long-lasting consequences for savers’ ultimate retirement wealth.

Bell said people should understand the impact that pausing or reducing pension contributions could have on their retirement savings and future retirement income.

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