Debt-bound Britons are more than twice as likely to cancel regular payments into Isas than pensions, new research has found.
Two-thirds – 67 per cent – of people with persistent unsecured debts have reduced regular payments into Isas and savings accounts, compared to 26 per cent of those paying into workplace pensions and 43 per cent of those paying into individual pensions, according to the research, which was conducted for Aegon.
The research comes as figures from the Bank of England indicate that household debt has reached its highest levels since the global financial crash ten years ago.
The research also revealed that half of those who were forced to reduce or stop payments to their workplace pension due to debt, said this meant they lost out on some or all of their employer contributions. The top three things people with persistent unsecured debt have cancelled are eating out, charitable donations and gym membership.
Aegon pensions director Steven Cameron says: “Many people will have periods where they have significant and at times persistent debt. While it’s important to have plans in place to remedy this, it’s also important to get into the habit of making regular pension savings. If an employer offers a workplace pension scheme, opting out could be a very damaging decision.”
“Economic indicators currently point to people in the UK struggling with a growing level of debt which could see people’s retirement savings put on a backburner. So it’s really encouraging to see that the majority of those with debt who responded to our survey demonstrated an understanding of the value their workplace pension offered and a commitment to using this to save for retirement.
“Because pensions are so far in the future, stopping paying in may seem like a pain free way of coping with debt. But cancelling any payment to a workplace pension will often mean the loss of a valuable employer contribution, making it a very costly means of repaying debt with serious long term retirement savings implications.”