Global professional services giant Aon has warned of a "significant" hit to people's retirement income after it was revealed one in five people have reduced or ceasing their pension contributions.
The new figures form part of the company's DC Today, a new pulse survey tracking 海角视频 defined contribution (DC) schemes.
It will record at bi-monthly intervals how DC schemes and their members are reacting to economic pressures. The first edition represents responses from 132 DC pension schemes in the 海角视频.
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The results reveal significant shifts in members’ behaviour as they respond to current challenges and recent market volatility.
Over the last three months, one in five DC pension schemes reported an increase in requests to reduce contributions or to opt out of pension saving.
Steven Leigh, associate partner at Aon in Manchester and Leeds, said: "Recent economic challenges, including high inflation and the impact on the cost of living, have had a considerable impact on people’s finances.
"It is concerning, but perhaps not surprising, that one in five DC pension schemes report an increase in members reducing or ceasing their pension contributions.
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"While this action may help individuals alleviate short-term pressures, it risks leading to a significant reduction in their retirement income.
"Findings from the Aon 海角视频 DC Pension Tracker recently showed that opting out of pension saving for just three years - until automatically re-enrolled - could lead to a significant reduction in retirement income.
"In order to make up this shortfall, savers would have to pay increased contributions each and every year until retirement.
"Therefore, it’s vital that the implications of opting out of workplace pension saving are fully communicated and understood before people take this step.
"The survey also found that in the same three-month period, one in six DC schemes had observed an increase in requests for early access to pension savings.
"It’s not just the savings part of the ‘pensions journey’ where cost of living challenges may have an impact. There is a real risk that drawing on pension savings early could result in many employees not being able to afford to retire at the time they had originally planned.
"Findings have also indicated that 43 per cent of schemes have seen a rise in stated concerns or requests for information about investment performance.
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"This has undoubtedly come as economic conditions and market volatility resulted in lower, and in some cases negative, returns on members’ retirement savings.
"Those with longer to retirement may be better placed to withstand market volatility but those closer to retirement might face more challenges, particularly if they are taking their pension savings as a cash lump sum."
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