Pausing pensions could be costly
Analysis3 has revealed that stopping or reducing pension contributions, even for a relatively short time such as a year, can have a significant impact on your final pension pot, with savers potentially being thousands of pounds less well off in retirement. In short, pausing pensions could be costly.
Choosing how to cut back
Almost all (93%) of those who responded to the analysts’ survey said they are feeling the impact of increasing costs and inflation. A further 77% expect to have to make cutbacks on saving or spending. However, an encouragingly low figure of 6% said they planned to reduce their pension contributions.
Thinking of the long term
Whilst it might seem tempting to give up or pause your pension contributions, it’s important to consider the impact any breaks in contributions would have on your retirement pot.
Keeping your long-term plans in mind and maintaining your savings habit wherever possible will help to keep your retirement planning on track. Talk to us before making any major decisions as pausing pensions could be costly.
According to a recent survey by the Pensions and Lifetime Savings Association (PLSA 2021)*
- 51% of people focus on their current needs and wants at the expense of providing for the future;
- Only 23% of people are confident they know how much they need to save to be comfortable in retirement.
We can help you build up the funds you’ll need to enjoy your retirement years to the full. We can give retirement income & pension planning advice on personal pensions, getting the most suitable annuity rates, stakeholder pensions, self invested personal pensions (SIPPs), small self-administered schemes and equity release.
3 Standard Life, 2022