Searches for pension opt out up as Brits look to swerve cost of living crisis

by | May 22, 2023

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A large percentage of Brits could be putting their financial future at risk by opting out of their pension during the cost-of-living crisis.  

According to the new research from Access People, analysis of online search data over the past year has revealed a 36% jump in the number of searches from people thinking about pausing their employee contributions across the UK – with some regions seeing even bigger spikes when comparing year-on-year searches for 2022/23 v 2021/22. 

Cardiff topped the list with nearly 133% more searches. Around a third of people in the Welsh capital work for the public sector which means at least some of them could be giving up on an attractive pension scheme. London, Oxford and Edinburgh – known for their high cost of living – also appeared in the top 10. 

 Population based on Census data Related searches for pension opt out 2021-22 (March 21 – Feb 22) Related searches for pension opt out 2022-23 (March 22 – Feb 23) % increase in searches 
Cardiff 362,400 2,880 6,700   132.64% 
London 8,799,800 62,240 92,230 48.18% 
Oxford 162,100 3,740 5,070 35.56% 
Luton 225,300 3,880 5,250 35.31% 
Liverpool 486,100 9,240 12,130 31.28% 
Birmingham 1,144,900 18,060 23,460 29.90% 
Edinburgh 553,569 6,290 8,120 29.09% 
Leeds 812,000 9,970 12,730 27.68% 
Plymouth 264,700 3,660 4,670 27.60% 
Glasgow 1,698,088 9,930 12,610 26.99% 

The data also revealed which cities had the most searches per capita – with Norwich ranking highest, followed by Cambridge and then Northampton. 

 
 
City Population based on Census data Related searches for pension opt out 2022-23 (March 22 – Feb 23) Number of people per search (22-23) 
Norwich 144,000 5,900 24.41 
Cambridge 145,700 4,820 30.23 
Northampton 215,963 6,830 31.62 
Oxford 162,100 5,070 31.97 
Leicester 368,600 11,270 32.71 
Middlesbrough 143,900 4,080 35.27 
Peterborough 215,700 6,000 35.95 
Ipswich 139,700 3,730 37.45 
Reading 174,200 4,580 38.03 
Blackpool 141,100 3,530 39.97 

As many as 90% of employers believe they have a responsibility to help staff through the cost-of-living crisis, according to another recent study by Access People and industry magazine HR Grapevine. 

Charles Butterworth, MD of Access People, said: “The cost-of-living crisis is putting household budgets under extreme pressure and many people are looking to make savings wherever they can. Employers might believe they have a responsibility to help their staff – but our figures suggest this isn’t always translating into real support.” 

“Before making any decisions about their pensions, I’d urge employees to find out what support their organisation offers and take professional advice.  

 
 

“Many offer employee assistance programmes, where staff can access counselling, as well as dedicated financial wellbeing advice and benefits, which can include anything from employee discounts to on-demand pay which allows them to draw down money they’ve accrued before pay day.”

separate survey by Access EarlyPay, also part of The Access Group, found that 93% of workers with access to on-demand pay say it’s helped them during the cost-of-living crisis, and three-quarters who’d relied on high-cost credit previously said they no longer felt the same pressure.

Abhishek Agrawal, Director of Access EarlyPay, said: “Growing numbers of employers have introduced on-demand pay, where workers can draw down the money they’ve already earned throughout the month to help reduce any cash flow issues they may experience, and alleviate stress.”

 
 

Pensions experts warn that opting out of a pension could mean missing out on tax savings, employer contributions and earnings from investments.  

Sam Robinson, Financial Advisor at Almond Financial, said: “For the vast majority of people, you shouldn’t opt out of your workplace pension. It’s free money from your employer and it can save you tax. There are exceptions, of course; people with large incomes and that have accessed pensions before should ensure they understand how this may affect them. Before making any big decisions, get advice on the impact of not contributing. 

“If you have a significant amount of funds or you are within five years of retirement, I suggest seeking advice about your pension, the investment approach and your plans for retirement. A lot of schemes assume you are going to buy an annuity and therefore may switch to cash, which could be detrimental long term.” 

 
 

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