UK savers are working to make pension saving a financial priority despite the impact of the cost-of-living crisis, industry research has suggested, although interest in responsible investment appears to be 'flatlining'.

Research from the Defined Contribution Investment Forum (DCIF) and Ignition House found that half (50 per cent) of UK adults think the cost-of-living crisis has had no impact on their pension saving habits.

The research showed that some savers have been impacted by rising prices, as 13 per cent of people had stopped paying into their pension due to rising prices, while 28 per cent admitted that they had not been able to save as much as they hoped.

In contrast, 9 per cent of savers are upping their pension contributions, rising to 12 per cent amongst younger people aged 22-24.

However, younger savers were also more likely to cut their contributions, with 32 per cent of savers aged 22-24 admitting that they hve no been able to pay in as much as they would have wanted, compared to 23 per cent of over 55s.

And whilst 60 per cent of those aged 55-64 said that the cost-of-living crisis has not impacted what they pay into their pension, one in ten over 50s admitted to dipping into their pension specifically due to rising costs, and a further 12 per cent expect to need to do so shortly.

More broadly, the research showed that awareness of responsible investment issues was 'flatlining', revealing that while UK consumers are very concerned about the world around them and are taking steps to mitigate their impact, most are unaware that how their pension is invested also has implications.

Indeed, when told in qualitative interviews that there is £3bn of money in pensions and that pension money could be a key part of the energy transition, most respondents were surprised.

In addition to this, awareness of the specific term responsible investment has remained static, as the proportion of people who say they are very aware of responsible investment has hovered at around 18 per cent since 2018.

Despite this lack of awareness, the research found that nearly half (49 per cent) of members would be willing to pay higher fees to invest in green infrastructure projects, provided they had a clear understanding of how it would affect their retirement savings.

When asked what types of infrastructure they think pension companies should prioritise, investing in renewable energy sources was the top priority, followed by improving the efficiency of recycling.

Natural capital – both saving existing forests and creating new ones – was another investment priority for members.

Commenting on the findings, Ignition House co-founder, Janette Weir, said: “It is really encouraging that so many people remain committed to behaving sustainably in their everyday lives.

"Members are still recycling and see the green transition as vitally important.

“However, the implications of the cost-of-living crisis – and the geopolitical instability that triggered it – are clear in members’ shifting priorities.

"For example, energy security, and limiting their own energy usage, was very important to people in this survey. It’s also sad to see emerging evidence which suggests that the 35-44-year-old demographic are less engaged with environmental, social and governance (ESG) at present – perhaps due to financial pressures, or the sheer overwhelm of everything going on in the world today.”

Adding to this, DCIF chair, Lorna Kennedy, cited the finding as demonstration that, as it stands, members are not making the link between the actions they are taking in their everyday lives to mitigate their impact on the world around them, and their pension savings.

"As an industry, we need to do things differently," she continued. "When people understand the power of their pension money and how it can be used for good, as well as to deliver an all-important investment return, they become far more engaged.

“As an investment forum, we want to change the conversation. In our future work, we’ll highlight ways in which some pension schemes have brought investment to life for members. We hope this will inspire the wider pensions industry, and prompt us all to do things differently.”

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