Pension saving levels have remained resilient despite rising costs placing pressure on household budgets, research from the Financial Conduct Authority (FCA) has revealed.

Six per cent of pension savers, representing around 1.5 million people, reduced or stopped pension contributions as a result of the cost of living.

The FCA’s annual Financial Lives Survey also found that, amongst those aged 55 or over with a pension in accumulation in May 2022, 6 per cent, or around 300,000 savers, had cashed in some or all of their pot to cover day-to-day expenses in the six months to January 2023.

However, the research identified a number of pensions saving gaps, revealing that the gender pensions gap in particular remains a significant challenge, as 71 per cent of men were saving into a pension, compared to 65 per cent of women.

In addition to this, the FCA found that just 53 per cent of self-employed respondents were saving into a pension, compared to 84 per cent of employees.

The research also raised concerns around savers understanding and expectations surrounding their pensions, revealing that nearly a third (30 per cent) of pension savers were unsure how much they had in pension savings in total.

In addition to this, a significant proportion of the population was found to be expecting to rely on the state pension, with 40 per cent of retirees citing this as their main source of income, rising to 51 per cent amongst women (31 per cent for men).

The report also raised concerns over the threat of pension scams, after the research revealed that 4.7 million people reported receiving suspicious calls during the period.

Of those who received an unsolicited approach, 8 per cent respondent or took up the offer, while 3 per cent said they lost money.

This follows on from the latest Pension Scam Assessment report from HelpandAdvice.co.uk, which also identified an increase in the number of people being approached unsolicited about transferring their pension in Q2 2023.

The FCA's survey also found a lack of trust in UK finanical services, with just 36 per cent agreeing that most finanical firms were honest and transparent in the way they treat them.

However, people were generally more positive when asked to rate their own provider, rather than the sector as a whole.

The findings come days away from the introduction of the FCA's Consumer Duty, which will require firms to act to deliver good outcomes for consumers, and aims to improve trust and confidence in the industry.

"Times like this show why it’s important people get the support they need as more people are likely turning to their financial services providers for help," commented FCA executive director, consumers and competition, Sheldon Mills.

"Our Consumer Duty will guide our ongoing work to improve the way firms provide customer support - getting through to your provider is the starting point for receiving help, so we will be working with them to improve in this area."

Adding to this AJ Bell head of retirement policy, Tom Selby, highlighted the findings that pension savings levels had remained robust despite inflation pressures as “positive”, noting that despite industry fears to the contrary, the FCA’s data suggested that, by-and-large, savers were acting responsibly and staying focused on their long-term goals.

However, he warned that surging inflation and rising financial vulnerability are like “blood in the water to scammers”, noting that while the number of people receiving suspicious calls has halved since the cold-calling ban was introduced in 2019, it remains “high”.

“Savers still need to be extremely wary and tool themselves with the knowledge to avoid potential scams, but there is now little doubt the ban – campaigned for by AJ Bell and others – has been successful in making the world a bit safer for millions of Brits,” he continued.

“Unsolicited approaches remain extremely varied, ranging from offers of free pension reviews and enabling people to ‘unlock’ their retirement pot early, to ‘opportunities’ to invest your pension in something offering ‘guaranteed returns’.

"Just 8 per cent of those who received an unsolicited approach responded or took up the offer, while 3 per cent lost money – but that’s still 100,000 people facing a devastating hit to their retirement plans.”

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