Pension savers have reportedly “contributed over 20% more to their pensions in Q2 2023 compared to the same period last year, despite persistent levels of high inflation,” according to new analysis from online pension provider, PensionBee.
The average quarterly contribution amount “for female savers increased by 21%, from £883 in Q2 2022 to £1,065 in Q2 2023.” Meanwhile, male savers, who continue “to save more into their pensions, boosted their average quarterly contribution amount by more than a quarter (27%), from £1,108 in Q2 2022 to £1,413 in Q2 2023.”
Self-employed savers also “managed to save more into their pensions than last year, with their average quarterly contribution amount increasing by 9% from £1,279 in Q2 2022, to £1,390 in Q2 2023.”
An overall increase in pension contribution amounts “could be attributed to recent wage rises, with the ONS reporting employees’ average total pay grew 6.9% from March to May 2023.”
This could suggest that savers are “determining contribution amounts based on a percentage of their earnings rather than their disposable income levels.”
Meanwhile, the average quarterly withdrawal amount “for customers aged 55 and over decreased by 10%, from £8,489 in Q2 2022 to £7,648 in Q2 2023.” This suggests a broad adoption of a more cautious approach “to withdrawals amid the cost of living crisis, as savers hope to make their money stretch further for longer.”
Becky O’Connor, Director of Public Affairs at PensionBee, commented:
“The rise in year-on-year contributions among PensionBee customers suggests that pension saving amounts may be more strongly linked to earnings, which have risen in general over the year, rather than disposable income levels, which most people have struggled to maintain due to the cost of living crisis. It also demonstrates a determination and laser-like focus among people who are consciously trying to boost their retirement savings for themselves, in the face of the odds. What we don’t know is what people might be giving up to prioritise their pensions in this way, but it appears those who have set this priority are not just sticking with it, but really going for it.”
As noted in the update:
“The decrease in withdrawal amounts suggests that the over 55s are cutting back and managing their retirement pots conservatively. Perhaps the cost of living crisis has focused minds on trying to make that pot last as long as possible. Adding more and taking out less are two positive signs of behavior change in the past year that could have long-lasting benefits for pension savers.”
