Two-thirds of those with unsecured debt have reduced savings
- Around two-thirds, (67%) of people with persistent debt who make regular payments into an ISA or savings accounts say their debt has forced them to cancel or reduce these payments.
- But nearly three-quarters of people (74%) said that despite their debt they have continued to pay into a workplace pension.
New research from Aegon has found that 67% of people with persistent unsecured debt report they have had to cancel or reduce regular payments into an ISA or savings account. The research comes as figures from the Bank of England** indicate that household debt has reached its highest levels since the global financial crash ten years ago.
While the research found that a majority of those with persistent debt cancelled or reduced payments to an ISA or savings accounts, it found that payments to pensions were more resilient to financial pressures.
The findings indicated that debt caused 43% of people to stop or reduce payments into an individual personal pension and only 26% of people to stop or reduce payments into a workplace pension, where they had one.
The research also revealed that half of those who were forced to reduce or stop payments to their workplace pension due to debt, said this meant they lost out on some or all of their employer contributions.
When faced with debt, people are more likely to cut back on other spending than give up their pension contributions with the top three things people have cancelled being eating out, charitable donations and gym membership.
Steven Cameron, Pensions Director at Aegon UK, said:
“Many people will have periods where they have significant and at times persistent debt. While it’s important to have plans in place to remedy this, it’s also important to get into the habit of making regular pension savings. If an employer offers a workplace pension scheme, opting out could be a very damaging decision.”
“Economic indicators currently point to people in the UK struggling with a growing level of debt which could see people’s retirement savings put on a back burner. So it’s really encouraging to see that the majority of those with debt who responded to our survey demonstrated an understanding of the value their workplace pension offered and a commitment to using this to save for retirement.
“Because pensions are so far in the future, stopping paying in may seem like a pain-free way of coping with debt. But cancelling any payment to a workplace pension will often mean the loss of a valuable employer contribution, making it a very costly means of repaying debt with serious long term retirement savings implications.”
* Research was conducted by Aegon with the Aegon UK consumer and customer panel. Total sample size was 441 adults. Fieldwork was undertaken in August 2017.
**The Money Charity, August 2017 http://themoneycharity.org.uk/media/August-2017-Money-Statistics1.pdf
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Notes to Editors
- In the UK, Aegon offers retirement, workplace savings and protection solutions to around two million customers, and employs more than 3,450 staff. More information: https://www.aegon.co.uk
- As an international life insurance, pensions and asset management company based in The Hague, Aegon has businesses in over twenty five markets in the Americas, Europe and Asia. Aegon companies employ over 28,000 people and have millions of customers across the globe. Further information: www.aegon.com
- Aegon is the Lead Partner of British Tennis.
Aegon is a brand name of Scottish Equitable plc. Scottish Equitable plc, registered office: Edinburgh Park, Edinburgh EH12 9SE. Registered in Scotland (No. 144517). Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 165548. An Aegon company. www.aegon.co.uk
© 2017 Aegon UK plc.