Almost 1.2 million people have abandoned their personal pensions during the recession. The huge drop shows how the economic downturn is contributing to the pensions time bomb facing the country.
During the 2007/8 financial year, 7.6 million people were saving into a personal pension, according to the Office for National Statistics (ONS). By 2008/9, that figure had dropped to 6.4 million. The ONS blames the "sharp fall" on the effect of "increased financial pressures during the recession".
As well as a drop in the number of people saving for retirement, there has also been a substantial decline in how much money people are saving. The total amount of money paid into personal pensions was £18.7 billion in 2009/10, down from £20.9 billion in 2007/08.
Serious concerns for the future
"The UK's population is on a collision course with its own retirement," says Darren Philp, director of policy at the National Association of Pension Funds. "People are not saving enough and millions risk poverty in their old age."
The scale of the drop raises serious concerns for the future. "Although some fall in contributions is not surprising in hard times, the extent of the drop is extremely worrying," says Michelle Mitchell, charity director at Age UK. "Too many people are devastated when they retire as the gap between expectations and the reality of what they will actually receive for a pension is realised."
Hopefully, the auto-enrolment pension reforms that are due to start being introduced next year will help to reverse the decline in pension saving. Up to nine million people are expected to start saving into a pension or increase the amount they save when auto-enrolment comes in.
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