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.

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