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April 3, 2008    

UK workers halve pension payments

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by Kay Murchie
UK workers halve pension payments

Research from Prudential has established that UK workers have nearly halved the amount they pay into private and company pension schemes in the last 12 months.

One year ago, employees were putting an average of £279 a month into a private or company pension scheme, however the contribution is now £145.

The report shows that people are struggling amid the global credit squeeze and are being forced to reduce their pension contributions.

Increasing household bills, rising mortgage repayments and below-inflation pay rises are affecting family finances, say Prudential. These people have no choice but to cut pension savings to keep their finances afloat.

However, this could prove harmful to their retirement according to pension experts. Gary Shaughnessy of Prudential said it is deeply concerning to see the amount that adults are personally paying into pension schemes has fallen so significantly over the last year.

However, research shows that prior to the cutbacks, workers were not saving enough money for a comfortable retirement. Of the 1,500 polled, those with a pension said they anticipated retiring with a fund worth £22,500 a year on average.

In order to afford this pension, a 20-year-old man needs to save £286 a month until he is 65. The report from the Prudential shows that workers did not even save enough last year to meet this target.

According to the Prudential, approximately 55% of us are not paying anything into a pension.

A recent report established that those in their late 50s and early 60s have soaring levels of debt meaning that they will have to continue working long after their retirement age.

According to a study by the charity Help the Aged, this group of people owe at least four times as much as people of the same age 10 years ago. The debts do not include mortgages, if they have one, only unsecured loans such as credit or store cards.

The study revealed that many will be forced to keep working, possibly into their late seventies, to repay credit card borrowings, overdrafts and personal loans.

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