More than one million people in the UK with a workplace pension are planning to reduce their contributions to cope with rising living costs, a new study from Barnett Waddingham has found.

Amid rapidly increasing costs of fuel, food, and other essentials, Barnett Waddingham’s research suggested that 7% of people with a workplace pension plan to reduce their contributions, a figure that translates to 1.05 million people.

Younger people appear to be more likely to consider reducing their pension contributions, with almost one in five people aged between 18 and 24-year-olds (18%) revealing they planned to do so.

The Barnett Waddingham findings, based on a study of 2,000 consumers in June, have also indicated that the risen cost of living has started to impact financial planning too.

A quarter (26%) of respondents also admitted to dipping into savings to cope with price rises and having to sacrifice long-term financial ambitions, a figure that increased to 29% for those over the age of 55.

For those without savings, the research revealed that almost one in ten people (9%) are increasing their use of credit cards, while 7% are paying more using ‘buy now, pay later’ schemes. This increase in credit card spending was true for 16% of 18 to 34-year-olds.

Head of DC at Barnett Waddingham, Mark Futcher, commented: “The cost of living crisis has forced many people to take a long hard look at our finances. But while there’s clear merit in doing some financial spring cleaning, cutting back on financial planning commitments could have a dramatic impact on long-term financial wellbeing.

“At a time of significant financial hardship, it’s important that employers do their bit to help employees keep their heads above water. At a basic level this means providing stronger financial guidance for employees and encouraging them to think twice before making knee jerk decisions with their finances.

“Better still would be to help valued employees shoulder the financial burden by upping employer contributions to workplace schemes and even considering continuing to pay employee contributions if an individual needs to pause contributions temporarily.”

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