Voluntary pension contributions have almost halved in the past 12 months, according to research from Prudential.
A survey of 1500 pension savers shows contributions have fallen by an average of £134 a month to £145.
The research also shows 55% do not contribute at all to a pension scheme, up 1% from last year. A total of 63% of women compared with 44% of men say they do not pay into an occupational pension.
However, those paying into schemes anticipate they will draw an average annual pension of £22,504 a year. Prudential warns such an income would require a 20 year-old man to save £286 every month until the age of 65, and a 20 year-old woman to save £413 every month until the age of 60.
Gary Shaughnessy, managing director of retail life and pensions at Prudential, says: “It is deeply concerning to see that the amount UK adults are personally paying into pension schemes has fallen so dramatically in the past year. With rising prices and a squeeze on savings, reducing pension contributions may look like an attractive short-term option, but the reality is that continuing to save as early as possible is vital if people are to build a pension pot large enough to maintain their lifestyle in retirement.
“While we always encourage people to look at their wider wealth portfolios, including housing equity and other savings, the current uncertain economic conditions and concerns over house-price deflation means that maintaining pension contributions is more important now than ever.”
Last week research by portfolio manager Brewin Dolphin showed one in 10 pension savers expects to stop, pause or reduce pension contributions during the next year because of the worsening economic outlook.
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Only 9,486 applied for the benefit in 12 months