Britons face ‘triple whammy’ on income today – savers urged to ‘be careful’ with pensions

The last Friday of the month marks payday for millions of people, but some will be disappointed with how much they get. Pay packets for April are being squeezed by numerous factors in the midst of the rising cost of living.

Soaring inflation, a freeze in income tax thresholds and rising National Insurance are being brought to bear on Britons.

As a result of these pressures, people could make rash decisions when it comes to their finances, especially to get by in the here and now.

However, experts have illustrated the substantial and adverse impacts certain moves could make – especially as it relates to one’s pension.

Kate Smith, Head of Pensions at Aegon, said: “When people’s pay for April hits their bank accounts, it will drive home the impact of the cost-of-living squeeze. 

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“While there may be a small immediate boost to take-home pay, Aegon analysis shows it could leave you thousands of pounds worse off in retirement. 

“What’s more, employees who pause pension contributions will very likely lose valuable employer contributions which help to boost retirement savings.”

Analysis from Aegon has shown the severe impact of freezing a pension contribution, even temporarily.

A one year pension break could mean a 25 year old on average earnings could miss out on £4,600 at state pension age.

Pausing for three years means missing out on £13,600, assuming, as is highly likely, their employer also stops contributing to their pension.

With pensions, people should always be aware the value of investments can go up as well as down.

For this reason, individuals may wish to seek regulated financial advice before making major decisions.

Pension Wise is also available as a Government-backed service to provide options to those edging closer to retirement.