Money saved into workplace defined contribution plans fell sharply as coronavirus hit the UK, new ONS data shows.
Employee contributions fell by 11 per cent and employer contributions by 5 per cent between Q1 (January to March) and Q2 (April to June).
Workplace DC membership held firm at 23 million at the end of June 2020 – the same figure recorded three months earlier.
Total pension payments and income withdrawal from funded occupational pension schemes were £13.2bn in Q2 2020, a 4 per cent decline since Q4 2019.
There was also a 5 per cent increase in total lump sum payments from Q4 2019, to £2.7bn in Q2 2020.
Around two-thirds of lump sum benefit payments during this period were from private sector defined benefit hybrid schemes.
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Reacting to the figures AJ Bell senior analyst Tom Selby says: “With the UK currently in the grip of the second wave of coronavirus, we are now getting a clearer view of the impact the first wave of the pandemic had on people saving for retirement.
“Inevitably the national lockdown hit savers hard, with employee pension contributions down 11 per cent and employer contributions 5 per cent lower.
“This drop in contributions likely reflects the impact of furloughing, with total auto-enrolment contributions based on 80 per cent of salary for millions of people. Some workers will also inevitably have opted out due to pressure on their incomes caused by the pandemic.”
Aegon head of pensions Kate Smith adds: “Initial figures showing payments and income withdrawals have fallen slightly in the first half of 2020 are encouraging, showing that the over-55s have been cautious when accessing their pension pot while values are depressed.
“But the picture may well have changed in the second half of 2020 as the pandemic continued. Pensions are designed to provide an income throughout retirement and reducing the amount of income withdrawn during a period of investment market downturn could be important for the longevity of the pension pot.”
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