Over a third have stopped pension payments

More than a third of people have ceased pension payments, according to research by Prudential.

Unemployment and a lack of spare cash are cited as the two main reasons for this trend in the nationwide survey of 1.602 non-retired adults in the UK.

Head of business development at Prudential, Vince Smith-Hughes said it was important ‘to get the message across that people need significantly more income than the basic state pension in retirement and what great value pensions actually are.'

The results of the nationwide study show that one in three stopped paying into their pension pots, as they were out of work.

Meanwhile over a quarter (27%) said that they could simply no longer afford the contributions. Prudential believes this could be due in part to rising inflation and falling interest rates.

43% of those who have stopped paying into their pensions do not plan to start again, despite the long-term impact it will have on their retirement income. For these people, Smith-Hughes said it was imperative for people to ‘be aware they have a gap and make up for it at some time in the future.'

Other reasons included career breaks from maternity leave to sabbaticals (4%), dissatisfaction with their pension scheme (2%), and member of a final salary pension scheme (3%) who did not need to make extra contributions.

The respondents were an equal mix of men and women across a diverse spread of age groups. While overall, 11% of respondents had stopped paying in due to job loss, the figure was higher (26%) among those aged 55-64. It is assumed a number of these respondents were under early retirement, yet it could also demonstrate this age group is more likely to be out of work.

Smith-Hughes admitted he was ‘surprised' by the volumes of the figures, but it would ‘endorse our strategy in trying to generate as much publicity in pensions as we can, and highlight the need for people to save.'

Prudential's calculations show that irregular contributions could reduce the values of savers' pensions by thousands of pounds. In fact, a saver who misses a year of gross contributions of £2,400 could see their final pension fund reduced by £7,000.