Cost of Living Squeeze Hitting Pension Saving

14 Dec, 2016

The cost of living is the most common single factor preventing people who live in cities in the UK from saving more into their pensions – and it is savers in Brighton, Bristol and Cardiff who are feeling the pinch the most, according to new research by Prudential.

The findings – which are taken from Prudential’s exclusive research comparing attitudes to finance and the preparations workers are making for retirement in the UK’s biggest cities – show that nearly half of pension savers blame the cost of living for not being able to save more. However, in some places around the country the picture is much worse, for example, the figure for those living in Bristol is 66 per cent, in Brighton it’s 62 per cent and 60 per cent in Cardiff.

The research identified Sheffield as the city where savers contribute the highest proportion of their monthly income to their retirement savings. Savers in the South Yorkshire city pay on average 11 pence out of every pound they earn into a pension, totalling £211 per month.  Meanwhile, up the M1 in Leeds, savers contribute the smallest proportion of their income to pensions – under five pence per pound earned.

Across the UK’s largest cities the average monthly pension contribution is £150, representing 6.5 per cent of the average monthly wage of just over £2,300.

Stan Russell, a retirement income expert at Prudential, said: “Saving for retirement can seem like a luxury when the cost of living is putting household income under pressure. However, it is important to remember that pension saving is for the long term and even the smallest amounts saved have the opportunity to grow significantly over your working life.

“With a large proportion of people in some cities admitting that they could afford to save more towards their retirement, many could benefit from a consultation with a professional financial adviser to help them set a savings budget and a retirement income goal.