In the wake of the growing debt crisis and fears of a double dip recession, new figures released by government show that more than a million workers in the UK stopped making contributions to personal pensions. This equates to one in every six workers.
Whilst this is indicative of the spreading fear amongst UK workers, it presents an even bigger problem for pension pots which are now billions of pounds shorter. Contributions from pensions enable investors to grow those pots but without ongoing contributions the pots are not only failing to grow, they are shrinking as well.
The Office of National Statistics voiced concern that a whole generation of workers in the UK would not be able to make it financially upon retirement if this trend continues. With these statistics came dire warnings that Britons should be saving for retirement, not reducing their savings at this time.
Figures show that some people had been making contributions regularly but when the recession hit they just suddenly stopped paying in. Along with inflation that is rising almost out of control and utility bills that are at record highs, people had to ultimately make a decision. Of course their priority had to be staying afloat in the present. The future remains uncertain but they need to pay bills in the here and now.
Added to the fact that inflation is high, utility bills are even higher, the average family has seen a decrease in annual income by more than £350 within the past few years. Oddly, Lord McFall of Alcuith stated that government needed to promote a “culture of saving.” It is true that the 14 million workers may retire with pensions much smaller than those of their parents. However, if the money isn’t there, how are Britons to save? A conundrum still unanswered.