Aviva’s latest research reveals that almost one in four (23%) Brits who have a pension – the equivalent of almost 5 million people are thinking about withdrawing money from their pension, opting out of automatic enrollment, or planning to reduce, pause or stop their contributions in a bid to help ease the financial squeeze.
This figure rises to 42% of 16–24-year-olds and just under two fifths (38%) of 25–34 year olds who are likely to act to relieve their current financial situation. There is also a distinct gender gap, with almost 3 in 10 (28 %) men planning to take one or more of these actions versus 18% of women.
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.”
Many people are facing tough choices but there is information and help available, for example through the government’s free and impartial guidance service, Pension Wise, or from a financial adviser.
The majority of respondents (79%) who sought financial advice before withdrawing money from their pension pot or reducing their pension contributions, agreed that it was extremely or somewhat helpful.