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Warning as pension payments drop Warning as pension payments drop
(about 12 hours later)
One in five people are planning to stop or reduce pension contributions during the next two years in a bid to save money, a new survey has suggested.One in five people are planning to stop or reduce pension contributions during the next two years in a bid to save money, a new survey has suggested.
A poll for insurance giant Axa found about half were cutting pension payments to offset food and fuel price increases, or to clear debts.A poll for insurance giant Axa found about half were cutting pension payments to offset food and fuel price increases, or to clear debts.
Axa warns that such a "pension holiday" may have an impact on quality of life during retirement.Axa warns that such a "pension holiday" may have an impact on quality of life during retirement.
The poll questioned 2,034 people online between 30 October and 6 November.The poll questioned 2,034 people online between 30 October and 6 November.
The past year has seen rises in food and energy bills, putting household budgets under pressure.The past year has seen rises in food and energy bills, putting household budgets under pressure.
And the credit crunch has caused lenders to raise their mortgage rates, giving many a shock when their current deal has finished.And the credit crunch has caused lenders to raise their mortgage rates, giving many a shock when their current deal has finished.
Taking a pension break should be a last resort because of the long-term repercussions Steve Folkard, AxaTaking a pension break should be a last resort because of the long-term repercussions Steve Folkard, Axa
The Axa survey showed 13% said they were planning to stop or reduce pension contributions because of bigger mortgage payments.
Also, 4% said they were going to reduce their current level of pension contribution or money paid into a retirement pot.
Another 4% said they were to stop paying into a pension or retirement pot, with the intention of not restarting payments.
Axa estimated 1.5m people will take a pension contribution holiday, collectively reducing the final value of their retirement funds by nearly £35m.Axa estimated 1.5m people will take a pension contribution holiday, collectively reducing the final value of their retirement funds by nearly £35m.
The firm said people aged between 35 and 44 were the most likely to be planning to cut back on contributions.The firm said people aged between 35 and 44 were the most likely to be planning to cut back on contributions.
The BBC's personal finance reporter Richard Scott said there were concerns that many people were not saving enough for a comfortable retirement anyway, and cutting pension contributions further could make that situation worse.The BBC's personal finance reporter Richard Scott said there were concerns that many people were not saving enough for a comfortable retirement anyway, and cutting pension contributions further could make that situation worse.
Steve Folkard, head of pensions and savings policy at AXA, said: "Taking a pension break should be a last resort because of the long-term repercussions.Steve Folkard, head of pensions and savings policy at AXA, said: "Taking a pension break should be a last resort because of the long-term repercussions.
"If you put £300 a month less into your pension for two years you will have a pension pot that is tens of thousands of pounds short when you retire.""If you put £300 a month less into your pension for two years you will have a pension pot that is tens of thousands of pounds short when you retire."