40% of young adults stop or reduce pension contributions in lockdown

Two in five people aged between 18 and 34 have either reduced (28%) or stopped (12%) their pension contributions as result of the COVID-19 pandemic, according to new research from Royal London.

A study by the pensions specialist revealed this age bracket was the most likely to have reduced or stopped pension contributions, compared to just 16% of those aged between 35 and54 who were least likely to have stopped or reduced contributions.

The survey, conducted by Opinium among 2,001 UK adults during June, found that affordability was the most common reason for altering pension contributions – affecting four in ten of those who reduced or stopped their contribution. Affordability was also a bigger issue for 18 to 34 year olds with more than half (51%) indicating they altered pension contributions because of it.

However, Royal London suggested its research shows this is unlikely to be a long-term issue. Almost eight in ten people (79%) suggested they were planning to resume or increase their contributions at some point in the future., which included the 11% who have already resumed or increased contributions during lockdown, and the 37% who said they plan to do so within three months.

Royal London also found that nearly one in five (18%) people have stopped or reduced contributions on other savings and investment products as a result of coronavirus, with those under 35 again the most likely to have done so (29%).

“The COVID-19 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,” said Royal London head of investment solutions, Lorna Blyth.

“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.

“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.”

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