Research from savings and pensions fintech Cushon shows that almost half of businesses (45%) with more than 500 employees report that some people are already leaving pension schemes, while 40% also report that some employees are reducing their contributions due to increasing financial pressures.

Almost half of businesses (45%) with more than 500 employees reported that some people are already leaving pension schemes while 40% also report that some employees are reducing their contributions due to increasing financial pressures.

The The employer research surveyed 500 HR Managers in companies with 500+ employees between June and July. The consumer research surveyed 2,080 UK adults within the same time period.

Although the number of employees currently opting-out of pensions schemes is relatively low - with the research showing only 11% considering doing this – the risk is that people will increasingly be forced to cut pension contributions as increased living costs continue to be felt.

Another major factor is the market volatility surrounding pension funds in recent weeks.

Retirement savings have been thrown into the spotlight after the Bank of England was forced to make an emergency intervention amid fears that some pension funds were at risk of collapsing following former Chancellor Kwasi Kwarteng’s mini-budget in September.

The pound plummeted following his announcement of a sweeping package of tax cuts, fuelling concerns about the government’s economic policy.

Pension funds were put at risk after there was a massive sell-off in gilts, a type of government bond that make up a large proportion of pension pots.

Because gilts are traded on the open market, the tax-cutting plans caused concern among investors who saw borrowing increase and lost confidence in the government’s ability to pay the debt back.

The situation left many have been left wondering what this turbulence means for pension funds and provoked fears over the security of pension pots, which could lead more people to reduce or cut contributions. 

According to the study, people are increasingly calling for their employers to offer financial wellbeing support with 47% of businesses saying their employees want support schemes introduced.

Steve Watson, Head of Policy & Research at Cushon, said people urgently need more support to ensure that stopping or reducing contributions is a last resort and a potential retirement savings crisis is avoided.

He said: "The recent reporting around the Bank of England’s financial intervention in the bond markets has not helped either. By stoking fears that the pensions market is unstable, this risks misleading savers into making financial decisions which will hurt them in both the short and long term.

Watson said that although some employers do offer workplace savings schemes, there are still too many who don’t.

He also notes that without regulatory changes it is difficult for businesses to automatically enroll employees into these schemes which can make them less effective.

“There are many things employers can do to help employees build a financial buffer so they’re better able to weather the storm. 

“Being able to offer generous and effective workplace savings schemes would ensure that people can financially plan for the future whilst having enough to get through the current crisis. However, without regulatory change, employers aren’t able to auto-enrol employees onto these schemes which is reducing their effectiveness and ultimately reducing people’s ability to build up a savings buffer.”

Cushon has partnered with the University of Lincoln to offer an alternative savings option for young people excluded from pensions auto-enrolment, helping many who are saving for the first time to build up a healthy savings pot.  The product has seen an opt-out rate of just 8%, the company said.