A massive £35 billion in pension savings could be last over a two year period as fears of recession hit home.

 

According to new research by a well known insurance company, around 1.5 million pensions savers have consider stopping their contributions to help them cope with the crisis.

 

However, the insurer estimates that a two year break from pension savings could cost the average person approximately £30,000 when they reach retirement.

 

The age group more likely to cut their pensions savings – 35 to 44 year olds – would lose an average of £28,700 if they suspend the payments for two years. Younger workers could miss out on even more and about £34,000 would be wiped from the pension pot of the average 25 year old.

 

The rising cost of living or repaying debts was a major reason to cut contributions for 53% of those who are struggling. A further 13% may cut their pensions savings to help meet rising mortgage repayments.

 

The head of pensions and savings policy at the assurance company said ‘Taking a pension break should be a last resort because of the long-term repercussions. 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.’

 

The assurance company said it is particularly important for those with individual stakeholder pensions to be cautious when considering cutting their pension contributions.

 

A 28 year old stakeholder pension saver contributing £300 per month into their fund would end up with £59,700 less in their final pension pot if they stopped payments for two years, worth more than £1,000 per year in their annuity payout, according to the assurance company.