Pension contributions fall by £1bn

Individuals paid £1bn less into personal pensions over 2009/10 than the previous year, according to HMRC figures.

Of that £1bn, a decrease in individual's contributions accounted for £940m, whilst employer contributions remained roughly the same as 2008/09 levels.

The average contribution per person per year fell from £945 to £886. There were 430,000 fewer investors into personal pensions in 2009/10 than in the year before.

"Pension contributions are no doubt a tempting cost to cut when times are tough," says Laith Khalaf, pensions analyst at Hargreaves Lansdown.

"But if they are never made good this is a problem shelved rather than a problem solved.

"This decline in pension saving highlights the importance of the auto-enrolment rules arriving in 2012."