One in three feel ‘financially worse off’ than a year ago

More than a third (34%) of people feel financially worse off compared to a year ago, research by the Pensions and Lifetime Savings Association (PLSA) has found.  

The survey of more than 2,100 retired and non-retired people revealed that just over a quarter (27%) of respondents saw an improvement in their financial situation in the last 12 months, while two-fifths reported no change.  

Though the number of people feeling worse off has dropped from 44% last year, many households continue to struggle, with 40% still needing to cut back on spending.  

The most common areas include:  

• dining out 

• takeaways 

• leisure activities  

Pension contributions  

The research also showed that pension contributions have remained largely unaffected, with strong support for increasing workplace pension contributions.  

Over half (51%) of retired respondents believe the minimum total pension contribution should rise from 8% to 12%. Currently, employees contribute 5% of their qualifying earnings, while employers contribute 3%. 

A significant portion (43%) think employer contributions should increase, and nearly half (45%) believe contributions should be evenly split between employer and employee. Additionally, most individuals (52%) are concerned that the full state pension may not be enough to live on when they retire.  

A spokesperson for the Department for Work and Pensions (DWP) said that 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.” 

What is the pension schemes bill?  

Introduced in the king’s speech in July, the pension schemes bill is part of an ongoing pensions review, which was mainly set out by the previous Conservative government.  

The bill aims to tackle the issue of ‘lost pension pots’ by automatically bringing together smaller deferred pots into one place.  

Pension schemes will also have to provide better retirement income solutions for savers. 

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