More than a million Brits are considering taking a break from their pension payments as the credit crunch turns into a recession, according to research from AXA and Prudential.
According to the pension
fund provider AXA, 1.5 million Brits are planning to temporarily stop their pension contributions, a move that could cost a total of £35billion if stopped for two years.
More than half of those taking a pension break are doing so to offset the rising cost of living and clear existing debts, while 13 per cent will do so in order to increase their mortgage
Commenting, head of pensions and savings policy at AXA, Steve Folklard, said: "Taking a pension break should be a last resort because of the long term repercussions. If you put £300 a month less into your pension for two years you will have a pension pot that is tens of thousands of pounds short when you retire."
In addition to taking payment holidays, Prudential has found that Brits are cutting back on the amount they pay into their pension funds. In fact, the research shows that one in five Brits have reduced their monthly contributions in order to combat the credit crunch.
And, according to Prudential, voluntary contributions into company or personal pension
schemes have fallen by 53 per cent in the last 18 months, while 55 per cent of British workers do not contribute anything to their private or company pension.
Defined contributions director at Prudential pensions
, Martyn Bogira, said: "It is staggering to see how much UK pension contributions are being scaled back as people look to reduce their outgoings but while a pension fund may seem a relatively pain free way to increase disposable income today, the impact of this on retirement will be significant."
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