Nearly a quarter (23 per cent) of people with a pension are considering withdrawing money from it, or stopping paying in, or reducing the size of their contributions, to ease the pressure on their finances, according to a survey.
More than two-fifths (42 per cent) of 16 to 24-year-olds and just under two-fifths (38 per cent) of 25 to 34-year-olds are likely to make changes to relieve their current financial situation, the research from Aviva found. More than 2,000 people were surveyed between late September and early October.
Alistair McQueen, head of savings and retirement at Aviva, said: “When times are hard, we understandably try to find ways to cut costs, so considering your savings is an obvious thing to do. But it’s important to weigh up the pros and cons when it comes to your pension.
“Pensions carry unique financial benefits that cannot be replicated elsewhere. For example, if you are in a workplace pension, it is very probable that your employer will be contributing too.
“If you stop saving, your employer will probably stop with you, and this boost will be lost. Pension saving also benefits from tax relief.
“Stop saving, and tax relief will stop at the same time. It’s important to understand these other benefits when you are looking at your pension.
“Many modern pensions give you great control over how and when you save. For example, you can often stop, start, increase, or decrease the amount you save, as and when you want.
“And from the age of 55, there is great control of how and when you access your savings. The benefits of these simple flexibilities are more valuable than ever during these difficult times.
“However, it is important to consider all options and take advice if possible.”
As well as financial advice, Aviva highlighted the free Government-backed Pension Wise guidance service, which is available to the over-50s. People of all ages can also get free impartial help from the MoneyHelper service.
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