Cancelling pension contributions should be a “last resort”

Action needs to be taken to discourage people from cancelling pension contributions during the current financial crisis, Axa has stated.

According to research by the financial company, 1.5 million people are considering such a move to free up extra finance, with 53 per cent stating they are planning on doing so to help clear debts or cope with the increasing cost of living.

And Axa figures indicate that should a 25-year-old man stop his contributions for two years, he would be £33,800 worse off when he comes to retire.

Head of pensions and savings at Axa Steve Folkard said a pension break should be a “last resort”.

“If you put £300 a month less into your pension for two years you will have a pension pot that is tens of thousands of pounds short when you retire,” he explained.

Cancelling insurance policies is another cost-cutting method being adopted by Britons, with a recent survey from Fairinvestment.co.uk finding almost a quarter are not taking out insurance, possibly as part of a debt management plan.

By Tom Musk