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Savers cut pension contributions during pandemic

written by Bella Palmer
cut-pension

7 per cent of UK pension savers reduced their contribution during corona crisis, compared to 22 per cent in Ireland and 13 per cent globally

More than one fifth of Irish pension savers have reduced contributions to their scheme during the Covid-19 outbreak.

Irish pension savers are three times more likely than those in the UK to have stopped or reduced pension contributions during the period, according to a survey by State Street Global Advisors (SSGA).

Globally, most people surveyed responded to the deteriorating economic situation caused by the pandemic by reducing their living expenses, with over half having reduced spending on non-essential items, or eliminating monthly savings.

Turning off pension contributions to save cash will hurt people's long-term savings and post-pension lifestyle, according to Ann Prendergast who heads SSGA in Ireland.

We found Irish savers were more active than those elsewhere during the crisis, checking their balance more, shifting out of shares, for instance, and re-allocating risk or reducing contributions and were more accepting of employers who reduced contributions, she said.

While people here are more likely to feel personally responsible for their pension's performance, the effect is often damaging, she said.

Ideally your pension should be ticking away in the background, a period of crisis is not necessarily a good time to redirect risk or make wholesale changes, said Ms Prendergast.

In the UK, just 7pc of pension savers surveyed reduced their contribution during the pandemic, compared to 22pc in Ireland and 13pc globally.

Irish people were also more likely to make changes to the mix of investments in their scheme during the period, potentially undermining their long-term strategic returns, Ms Prendergast said.

In countries - including the UK - where auto-enrolment is up and running, the survey found people are less anxious about their pension and less likely to make adjustments to their pension planning, the survey found.

The research found that 28pc of Irish pension savers surveyed had checked their pension balance more regularly during the pandemic - 50pc higher than the global average.

The survey is based on online interviews with 3,479 retirement savers in Australia, Ireland, the Netherlands, the United Kingdom and the United States who have access to a workplace-sponsored defined contribution (DC) retirement savings plan.

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