The last Friday of the month marks payday for millions of people, but some will be disappointed with the amount they receive. April payment packages are being reduced by numerous factors amid rising cost of living.
Skyrocketing inflation, a freeze on income tax thresholds and rising national insurance are taking a toll on Britons.
As a result of these pressures, people may make rash decisions when it comes to their finances, especially to survive in the here and now.
However, experts have illustrated the substantial and adverse impacts that certain moves could have, especially as it relates to one’s pension.
Kate Smith, Director of Pensions at Aegon, said: “When people’s April pay hits their bank accounts, the impact of lower cost of living will become apparent.
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“While there may be a small immediate boost to take home pay, Aegon’s analysis shows it could leave you thousands of pounds worse off in retirement.
“In addition, employees who pause pension contributions are very likely to miss out on valuable employer contributions that help boost retirement savings.”
Aegon’s analysis has shown the serious impact of freezing a pension contribution, even temporarily.
A one-year pension gap could mean a 25-year-old with average earnings could lose £4,600 at state retirement age.
Taking a three-year break means losing £13,600, assuming, as is very likely, that your employer also stops contributing to your pension.
With pensions, people should always be aware that the value of investments can go down as well as up.
For this reason, people may want to seek regulated financial advice before making important decisions.
Pension Wise is also available as a government-backed service to provide options for those approaching retirement.