One in three people ‘feel financially worse off than a year ago’
The proportion of people reporting being financially worse off than a year ago has eased, but many are still cutting back, according to the PLSA.
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A third (34%) of people surveyed in September reported being financially worse off than 12 months earlier.
Just over a quarter (27%) have seen an improvement in their financial position in the last 12 months, while two-fifths (39%) said their financial situation remained steady, according to the Pensions and Lifetime Savings Association (PLSA).
The proportion of people reporting being financially worse off than a year ago has eased, from 44% in 2023, according to the research.
However, a significant proportion of households are still needing to make cutbacks, with two-fifths (41%) feeling the pinch, edging down from nearly half (48%) last year.
- Better, 27%
- Worse, 34%
- The same, 39%
The most common areas for reductions in spending included dining out, takeaways and leisure activities, the survey of more than 2,000 people found.
Despite reductions in many areas of everyday spending, payments into pensions were the area least likely to have been cut, the research indicated.
There was also strong support for higher automatic enrolment pension contributions. Around half of those not retired (51%) believe the minimum total contribution into workplace pensions should rise from the current 8% to 12%.
Many people surveyed also believe contributions, where employees currently pay 5% of qualifying earnings and employers pay 3%, should be bolstered more by employers.
Nearly half (45%) think contributions should be split equally, with a further 43% arguing that employers should pay more than employees.
Among those paying into a workplace pension, a third (36%) said less than 12% is being paid in.
More than half (52%) of employees in the survey were also concerned that the full state pension would not be enough to avoid a tough retirement financially.
Two-fifths (44%) would prefer their pension investments to help support public services such as the NHS and schools, and 54% would prefer their funds to support UK companies rather than those overseas.
Achieving the best possible returns must remain the priority, whether those investments are in the UK or overseas
But a two-thirds majority (65%) believe that pension providers should continue to invest for the best possible returns, regardless of whether the investments are in the UK or overseas.
Nigel Peaple, chief policy counsel at the PLSA, said: “Although many people are still feeling the effects of the rising cost of living, there are signs the peak of the crisis may have passed for certain segments of the population.”
He added: “While there is a desire among savers to see pension investments supporting UK companies and public services, this should not come at the cost of lower returns.
“Achieving the best possible returns must remain the priority, whether those investments are in the UK or overseas.”
Automatic enrolment has turned millions of people into pension savers with around nine in 10 eligible employees saving for their retirement. As part of our landmark pensions review, we will explore options to expand on this success
Yonder Consulting surveyed more than 2,100 people across the UK for the research, including non-retired and retired people.
A Department for Work and Pensions spokesperson said: “Automatic enrolment has turned millions of people into pension savers with around nine in 10 eligible employees saving for their retirement. As part of our landmark pensions review, we will explore options to expand on this success.
“More than 15 million pension savers could benefit from our new Pension Schemes Bill, with the potential for an average earner to have £11,000 more in their defined contribution pot by retirement when saving over a career.”