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Pension saving schemes neglected

29 July 2009 / by Rebecca Sargent

Pension savings are being neglected by 16 per cent of workers, a new study from Prudential has revealed.

According to the research, more than one in 10 workers who have a pension scheme say they have reduced their contributions or stopped them altogether over the last five years.

And, as people skimp on their retirement saving, Prudential predicts a rise in pension poverty, and the number of people relying on a state pension looks set to increase, from 22 per cent this year to 27 per cent in the next 10 years.

Commenting, Martyn Bogira, Prudential's director of defined contribution solutions, said: "It's worrying that many people who have been working for years and saving for retirement seem to have given up hope and stopped paying into their pension. This is the last thing they should be doing.

"It's also really worrying that many people either planning to retire imminently or within the next decade still believe the state will support them when we know that, for many people, this just won't be the case."

However, workers should be paying as much as they can into their pension funds, Mr Bogira adds: "With the growing body of evidence suggesting the state pension will be inadequate for many people in old age and with final salary schemes disappearing, now is the time for people to take advantage of the pension schemes which are available to them.

"Take the opportunity to pay as much into your pension as you possibly can and talk to your employer about your pension options. But the most important thing is don't give up and don't put it off. Paying into a pension is not something you can either afford to abandon or delay."

According to the Prudential research, a worker who puts off paying into a pension until they are 35 could end up with a pension pot at 65 that is worth 45,000 less than if they had started investing at 30.

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