Over a third of UK adults with a private pension have made changes to their pension contributions as a result of a major life event, says Standard Life.
According to the retirement specialist, 37% of UK adults have paused, reduced or stopped pension contributions in response to events in their lives.
Taking a career break is the most common trigger (45%), followed by redundancy (44%), becoming self-employed (33%) and having children (21%).
Those who paused contributions after having children did so for the longest amount of time, an average of two years and four months. This compares to an average one year four months taken following redundancy and one year 10 months following a career break.
Standard Life said the impact of life events on pension saving is felt more acutely among women and younger generations. Women are significantly more likely than men to pause, reduce or stop pension contributions after starting a family (27% compared with 16%).
Meanwhile, nearly a third of all Gen Z (32%) and millennials (33%) have paused or reduced contributions as a result of life moments, compared with 24% of Gen X and 16% of Baby Boomers. Furthermore, becoming self-employed is also a major trigger for Gen Z pausing, reducing or stopping their pension contributions (56%), as well as taking a career break (59%) and being made redundant (57%).
However, Standard Life warned that pausing pension contributions for a notable amount of time, particularly for the one in seven (14%) who did so for more than five years, can have lasting consequences.
For someone starting work at the age of 22 on a salary of £25,000 and paying minimum monthly auto-enrolment contributions could build a retirement pot of around £210,000 by age 68.
However, a two-year pause between ages 30 and 32 could reduce that pot to £200,000. A five-year pause between ages 30 and 35 could reduce the pot further to £185,000.
A 10-year pause between 30 and 40 could result in a pot worth £161,000 while a fifteen-year break between the ages of 30 and 45 could bring it down to £138,000.
Despite this, nearly two thirds (62%) of people yet to retire who have paused, reduced or stopped contributions due to a life event feel confident that they can make up any shortfall on their pension contributions. Nearly two in five (38%) of those who have paused contributions already have a plan in place to manage this, including intending to increase contributions as their income rises (32%) or expecting to work for longer (24%) to restore lost momentum.
Mike Ambery, retirement savings director at Standard Life, said: “The challenge is that pensions build over decades so even relatively short gaps can have a bigger impact than people expect. A pause might feel temporary at the time, yet it can have a lasting impact if contributions aren’t restarted.
“Everyone’s journey to and through retirement can be better and the encouraging news is that small steps can make a real difference. Restarting contributions as soon as possible can help rebuild momentum.”
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