Two in five Millennials cut pension contributions amid Covid-19

Two in five (40 per cent) 'Millennials' (aged 18-34) stopped or reduced pension contributions in light of the Covid-19 pandemic, research by Royal London has found.

The analysis revealed that 12 per cent of savers aged 18-34 have stopped their pension contributions since the start of the pandemic, whilst 28 per cent have reduced the amount they contribute.

In contrast, just 16 per cent of those aged 35-54 had stopped or reduced contributions, making them the least likely age group to have made such changes.

More than half (51 per cent) of those aged 18-34 cited reasons with affordability as the key driver for changes to their pension contributions.

However, Royal London argued that this is “unlikely to be a long-term issue”, as almost eight in ten people (79 per cent) stated that they plan to resume or increase their contributions in future.

Of this subset, more than one in ten (11 per cent) had already resumed or increased contributions during lockdown, whilst more than a third (37 per cent) stated that they plan to do so within three months.

Pensions are not the only are of savings to be hit by the pandemic however, with a further 18 per cent of people having stopped or reduced contributions on other savings or investment products since the lockdown.

Commenting on the findings, Royal London head of investment solutions, Lorna Blyth, said: “The Covid pandemic has put a real strain on many peoples’ finances and the research shows many are looking to reduce their outgoings by cutting or even stopping contributions.

“However, it is positive to see the vast majority of people have plans to resume or increase their pension contributions at some point, with some already having done so.

She added: “It is vital that people follow through with their intentions to resume contributions as soon as they are able if they are to avoid long term damage to their retirement prospects.

"It’s important to take proper financial advice to help determine the best decision for your finances.”

Research earlier in the pandemic implied that savers were ‘saving more and withdrawing less’ during lockdown, whilst further research from the Association of British Insurers showed that savers had chosen to press ‘pause’, as pension engagement levels fell ‘dramatically’.

The Department for Work and Pensions also confirmed earlier this month that whilst the full impact on auto enrolment was ‘uncertain’, it was working closely with the industry to gauge the impact of the pandemic.

    Share Story:

Recent Stories


Climate Investing
Laura Blows speaks to Aled Jones, Head of Sustainable Investing for Europe at FTSE Russell, and Adam Matthews, Director of Ethics and Engagement for the Church of England Pensions Board, about the role of climate investing within a pension fund portfolio.

Managing volatility
In the latest Pensions Age podcast, Laura Blows speaks to Cambridge Associates head of European pension practice, Alex Koriath, about the Covid-related market volatility and how pension funds can prepare for the challenges ahead

De-risking options for pension schemes
In this latest Pensions Age podcast, Linklaters' Sarah Parkin talks to Laura Blows about the wide range of choice available to pensions schemes for the partial, or full, removal of their risks

Risk transfer opportunities
Laura Blows speaks to Lisa Purdy, Head of Fiduciary Distribution at Legal & General Investment Management and Gavin Smith, Pricing and Execution Director - UK PRT at Legal & General, about the impact of the recent market volatility on the bulk annuity and risk transfer market and the potential opportunities for the future

Bulk annuities during coronavirus
Laura Blows speaks to Just business development manager Prash Mehta about the impact of coronavirus on transactions