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50% drop in pensions contributions in a year

UK adults have cut their voluntary pension contributions in half over the past year according to Prudential.

The Prudential 2008 Retirement Savings Report found people with a company or private pension are contributing around £134 a month less than in 2007. Non-retired UK adults are contributing an average of £144.57 a month to their pension scheme, which is equivalent to £1,734 a year. But last year the savings report found the average monthly contribution was £279.38 a month.

The report also revealed that 55 per cent of non-retired UK adults are not contributing at all to a private or company pension scheme – 63 per cent of these are women and 44 per cent are men. Despite this those paying into such pension schemes expect to draw an average annual pension of £22,504 a year, with men expecting to be able to draw an annual pension of £26,355.

Prudential managing director retail life & pensions Gary Shaughnessy says: “It is deeply concerning to see that the amount UK adults are personally paying into pension schemes has fallen so dramatically in the past year.

“With rising prices and a squeeze on savings, reducing pension contributions may look like an attractive short-term option, but the reality is that continuing to save as early as possible is vital if people are to build a pension pot large enough to maintain their lifestyle in retirement.”

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