Britain is facing a pension poverty ‘time bomb’ after Rachel Reeves’ punishing tax grab helped plunge retirement savings by 20 per cent in six months.
Survey figures suggest Britons may have been reducing their pension contributions since Christmas as the economy reacted to Labour’s new tax regime.
The Chancellor’s national insurance hike has been partly blamed for high inflation this year, raising the cost of goods and services.
Critics said last night the increased cost of living is ‘squeezing’ households and preventing people from putting money away for their retirement.
As a result, the average monthly pension contribution has slumped to £53.40 this month from £59.10 in April and £65.10 in December.
This is the first time in two years contributions have dropped for six months in a row, according to data from the House Money Index compiled by price comparison website MoneySuperMarket.
At the same time, average household spending on bills and other outgoings surged by 12 per cent to £1,564 per month.
The data showed the average Brit is now shelling out £52.14 per day on essentials, up from £46.40 in December.
Britain is facing a pension poverty ‘time bomb’ after Rachel Reeves ’ punishing tax grab helped plunge retirement savings by 20 per cent in six months
Kara Gammell, personal finance expert at MoneySuperMarket, said: ‘People are reducing their private and workplace pension contributions, perhaps to help offset rising costs and stretched household finances.’
Last night, Helen Whately MP, shadow pensions secretary, said: ‘Britain is facing a pension poverty time bomb of Labour’s making.
‘By squeezing the public with more taxes and higher bills, people are being forced to make terrible choices – choices we won’t see the full consequence of for years.
‘The Conservatives will always stand on the side of the makers – those who work hard, do the right thing, and want to get on in life.
‘And so we will hold Labour to account for the economic mess they are making.’
John O’Connell, chief executive at the TaxPayers’ Alliance said: ‘Sky-high taxes and soaring living costs mean hard-pressed households are dipping into their retirement savings just to stay afloat.’
This month, the Office for National Statistics said UK inflation jumped higher than economists had expected to 3.6 per cent in June, up from 3.4 per cent in May. It marked the steepest increase since January 2024, with critics blaming Mrs Reeves’ ‘job tax’.
Survey figures suggest Britons may have been reducing their pension contributions since Christmas as the economy reacted to Labour’s new tax regime
Work and Pensions Secretary Liz Kendall said the Government was reviving New Labour’s Pensions Commission to help people save more.
She said: ‘People deserve to know they will have a decent income in retirement – with all the security, dignity and freedom that brings.
‘But the truth is, that is not the reality facing many people, especially if you’re low paid, or self-employed.
‘The Pensions Commission laid the groundwork, and now, two decades later, we are reviving it to tackle the barriers that stop too many saving in the first place.
