Recession Lowered Pension Payments

New figures from HMRC have shown that the amount of money that was paid in to personal and stakeholder pension plans fell by around 5% during the recession.  This meant that £1.1bn less was paid in during the recession as opposed to the previous period.

£19.7bn was paid into such schemes during 2008-2009, making it the first drop since the mid 90s with lower employee contributions being the main cause, accounting for £1bn worth of the fall.

Self-employed people also paid in less than the previous period, whereas the amounts paid in by employers actually rose slightly.

"A collapse in pension saving of this magnitude will inevitably have repercussions further down the line unless savers make good their missed contributions," said Laith Khalaf of financial advisers Hargreaves Lansdown.

"As things stand individuals are understandably reluctant to put money away for their retirement when their immediate future looks uncertain."

Since 2006, when HMRC limits were relaxed on payments into pension schemes, the amounts being paid in have steadily risen.  However, with unemployment quickly increasing adding to the struggle of the recession, the upward trend in these figures was quickly curbed.

Mr Khalaf added, "Faced with uncertainty over future earnings it is understandable that some chose not to save into a pension in case they needed money in a hurry."

Posted at 04:36PM May 19, 2010 by Marc Stenton in The Economy  |  Comments[0]