A quarter (25 per cent) of adults have stopped or are planning to stop contributing to their workplace pensions in order to keep up with the rising cost of living, according to research from Charles Stanley.

The findings have prompted concern that the "soaring" cost of living could undermine consumer wellbeing, with Charles Stanley warning that this could prompt savers to make knee-jerk decisions that could have "disastrous consequences" on their long-term finances.

Indeed, it explained that although savers may think that stopping pension contributions will help them to meet their short-term financial needs, it also has the potential to make a considerable difference to future living standards in retirement.

However, pension contributions were not the only area of concern, as savers have made cuts in a number of areas in light of the cost-of-living crisis.

For instance, the research found that 10 per cent of adults have already given up insurance policies to meet the rising cost of living, including life insurance, private health insurance, income protection, while a further 18 per cent plan to.

In addition to this, 28 per cent of consumers said they have stopped or are planning to stop investing in the stock market, while 29 per cent of respondents revealed that they don not have an emergency fund, and 14 per cent of those who do are dipping into this once a month.

Commenting on the findings, Charles Stanley director of Onestep financial planning, Lisa Caplan, stated: “Understandably, people are looking at ways to meet their living costs but are making decisions that will impact their long-term financial position.

"Often people feel pension money is not ‘really theirs’ and they will never be able to access it. This isn’t true. Since the pension freedoms were introduced in 2015, many pensions can be seen as a tax advantaged savings pot.

“Opting out will mean people are missing out on an extra 20 per cent cash on their pension contributions, as well as their compulsory employer contribution.

"This kind of short-term thinking, potentially driven by a lack of understanding on what is really being given up, adds up over the years and leaves people vulnerable to a less secure financial future.”

“People making such drastic decisions that could jeopardise their financial futures shows a clear lack of financial awareness and knowledge among UK adults.

"The current crisis is proof that more needs to be done to support consumers in ensuring they make the best financial decisions that will help them now and later in life.”

Share Story: