Despite the cost-of-living strain, most savers are continuing to save into their pension, research from Pensions UK has found, with 4 per cent of savers having reduced pension contributions.

The research showed that many are struggling, as 44 per cent of people say their financial situation is worse than 12 months ago, up from 34 per cent in 2024.

As a result, many are cutting back on everyday spending, including eating out (39 per cent), takeaways (35 per cent), holidays (32 per cent) and even savings contributions (31 per cent).

However, pension contributions remain largely untouched, and in fact, 65 per cent agreed that people should be encouraged to make higher pension contributions.  

The area of reform with most support, however, was simplicity. Pensions UK found that 65 per cent agree people should be encouraged to make higher contributions, 87 per cent expect the government to ensure pensions deliver good value for money, 61 per cent want all pensions automatically combined, and 77 per cent  want to see all their pensions in one place.

In addition to this, 79 per cent agree people should be able to easily choose how their pension is invested.

There was also support for increases in the state pension, as 62 per cent did not believe this to be enough to live on, and 89 per cent felt that the state pension should always rise with the cost of living.

In particular, Pensions UK found that keeping the state pension rising with inflation (58 per cent) and ensuring it is enough to live on (56 per cent) were the top concerns.

Other priorities included keeping pension tax rules simple and stable (28 per cent) or improving financial education for younger people (26 per cent).

Pensions UK executive director of policy and advocacy, Zoe Alexander, said: “Households are under pressure, but what really stands out is that people are continuing to save through automatic enrolment, and indeed 65 per cent of people believe contributions should go up.

"This demonstrates both the value people place on retirement security and the power of automatic enrolment. It puts the onus on politicians and industry, and the current Pensions Commission, to make sure the system works well for as many savers as possible.

"Pensions UK will be supporting the commission through its own research on automatic enrolment system design.

“Encouragingly, many of the reforms in the Pension Schemes Bill, such as action on small pots, guided retirement products and a new value for money regime, reflect what the public want and what Pensions UK has long called for.

“Our research shows that people want government to focus on protecting the value of pensions and helping them grow steadily over time.

"Decisions about how pensions invest should always be based on what is best for savers, not short-term policy aims, otherwise people could face unnecessary risks. The best way to deliver strong outcomes is for schemes to make investment decisions in the long-term interests of members.” 

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