Workers cut back on pension saving to pay rising bills | Personal Finance | Finance

With real wages falling and bills rising, people across the country are looking for ways to cut expenses and increase their income.

According to a report by the Pensions Management Institute (PMI), in the past year 20 percent of employees chose not to participate in workplace pension programs or asked to reduce their deductions. Another 20 percent are considering doing it.

By opting out, and allowing for additional tax and national insurance, an employee on £20,000 will receive an extra £550 in take-home pay, or £46 per month. Employees on higher wages can increase their take-home pay more.

But they miss out on the same pension benefits as their employers, along with tax relief, so they have less to save for retirement.

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The PMI survey of 2,000 workers found that seven percent opted out in the past 12 months and 13 percent applied for lower contributions.

Self-employed workers who have less than five per cent of their annual salary above £6,240 deducted, plus employers at least three percent.

Aviva research this month found that 23 percent of workers in a pension considered stopping, stopping or reducing their contributions.

Tim Middleton, director of policy and external affairs at PMI, told the Express they were “concerned”.

He said: “We urge those who are considering suspending or stopping pension contributions to consider the impact on their retirement plans.”

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Employers are required to automatically enroll new employees in a pension scheme. To avoid it, employees must choose clearly and until recently, only 10 percent did.

But the rising cost of living is putting increasing pressure on struggling British families.

Ros Altmann, former pensions minister, said: “It’s important that people think carefully…you will lose the free income from your employer and the tax man, which will be added to your pension fund. So there is more to lose than just the payments to your pension.

“I must say, the pension industry has not risen to the challenge of attracting people to keep paying. Your pension company has had a few years to help you find out how many pensions and how important they are to your future. I just hope the message gets through to people.

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“The industry has missed the opportunity for people to be proud of their pensions. The sooner they deliver those messages, rather than relying on the media to do it for them, the better.

●Most households’ living standards in 2023 will be as bad as this year, amid falling wages and rising energy, tax and mortgage bills, a survey has warned. think house.

Families are facing a cost of living “earthquake year” with disposable incomes expected to decline by 2022, according to the Resolution Foundation.


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