Pension contributions have slowed as the economy continues to pressure households to find money to pay bills and daily living expenses. In the latest data from HM Revenue and Customs revealed that personal and stakeholder pension contributions fell by more than 1 billion pounds in the 2009-2010 tax year.
According to the data from the Revenue estimates are that 430,000 fewer UK residents put away retirement savings into pensions. The previous financial year of 2008-2009 saw 19.26 billion pounds contributed to pensions, whereas for the 2009-2010 financial year the contributions were only 18.2 billion pounds.
New rules for pensions will be coming into play in 2012. Experts believe the automatic enrollment rules will be important. It will force employers to pay into private employee pensions or use the government’s new National Employment Savings Trust, or NEST, pension scheme. All employers will be required to either use NEST or provide a pension that is as good. This amounts to 750,000 employers being required to provide a pension to employees for the first time.
This requirement is being seen by several small businesses as a hardship. Others see it as a way to simply put more pressure on the private sector to pick up where the public sector is drawing out.
Experts believe many households are choosing to use funds instead of contributing and are not realizing the importance of retirement savings even in the face of hard economic times. There may be many however, that are choosing savings options that will better allow them access to the funds should further hardships occur.