Approximately half (51%) of UK savers are likely to review or reduce pension contributions in favour of short-term saving or debt reduction or elimination as a result of the Covid-19 (Coronavirus) pandemic, according to research by BlackRock.
Its Defined contribution (DC) pulse survey, which surveyed 1,000 UK savers, also found that 76% agree that they need to be more careful about their financial future, although a further 44% see retirement saving as important.
However, more than half (51%) said that they are unable to save a sufficient amount to achieve the kind of retirement they desire, with 100% of respondents over the age of 65 reporting that they have fallen behind with their retirement savings.
In addition, just over a third (35%) believe their pension contributions, including employer and tax contributions, need to equal or exceed 15% of salary in order to achieve their desired retirement goals, while just 13% currently make a contribution of 15% or more to their primary workplace pension scheme.
Alex Cave, head of UK institutional defined contributions at BlackRock, said: “Our research clearly evidences that many people are struggling with matching expected retirement lifestyle with what will be reality. Our view continues to be that ensuring the right level of portfolio risk/return, and appropriate levels of contributions of at least 15% of salary over time, are critical to ensuring the type of lifestyle savers expect in retirement.
“In the current environment, people are understandably having to prioritise short-term financial pressures over longer-term retirement ambitions. Still, we believe that being invested, and staying invested over the long-term, enables compound interest to work for savers throughout their working lives and allows their capital to work much harder for them. It is imperative to stress the need to stay committed to pensions through these months of uncertainty, particularly in light of the potential ‘lower forever’ rate environment for savers.
“We are reassured by our research finding that savers’ focus on their pension pots will likely become a post-pandemic priority, with nearly half of respondents considering retirement saving important by 2025.”