A quarter of adults have stopped or are planning to stop contributing to their workplace pensions in order to keep up with rising living costs, a new study has found.
Research from wealth manager Charles Stanley suggests that the soaring cost of living is undermining consumer wellbeing and saving.
It said financial struggles were triggering some people to make “knee jerk” decisions that may have disastrous consequences on their long-term finances.
Stopping pension contributions, for instance, has the potential to make a considerable difference to future living standards in retirement, even though some people are opting to do so to plug the financial gap in the short-term, it said.
Meanwhile 28% of consumers have said they have stopped or are planning to stop investing in the stock market, potentially reflecting a lesser ability to save or a loss of confidence in markets.
Lisa Caplan, director of OneStep Financial Planning at Charles Stanley, said: “Understandably, people are looking at ways to meet their living costs but are making decisions that will impact their long-term financial position.”
She said that people often feel pension money is not ‘really theirs’ and they will never be able to access it, which isn’t true. “Since the Pension Freedoms were introduced in 2015 many pensions can be seen as a tax advantaged savings pot,” she said.
“This kind of short-term thinking, potentially driven by a lack of understanding on what is really being given up, adds up over the years and leaves people vulnerable to a less secure financial future.”
The survey also revealed that 29% of respondents do not have an emergency fund and, of those that do, 14% said they dip into it once a month.
Meanwhile fewer than one in four people said they have life insurance in place to support their families in the event of their death.
And when it comes to safeguarding income in the event of illness or redundancy even fewer are protected with just 7% saying they have critical illness insurance in place and another 7% claiming that they have income protection.
The research was published to coincide with Pension Awareness Week this week.
• Research was carried out by Censuswide among a UK representative sample of 2,086 UK adults between 09 June and 13 June.
