One-in-three people 'feel financially worse off than a year ago' survey shows

A third of people surveyed in September say are financially worse off now than they were 12 months ago.

Just over a quarter (27%) have seen their financial position improve in the last year, while two-fifths (39%) said their financial situation remained steady, according to the Pensions and Lifetime Savings Association (PLSA). The number of people reporting being financially worse off than a year ago has eased from 44% in 2023, the research shows.

However, a significant proportion of households are still needing to make cutbacks, with two-fifths, or 41%, struggling with household budgets, slightly down from nearly half, or 48%, last year. Dining out, takeaways and leisure activities were the most common areas for spending reductions, the survey of more than 2,000 people found.

Despite cutbacks in many areas of everyday spending, payments into pensions were the least likely to have been reduced, the research indicated. There was also strong support for higher automatic enrolment pension contributions.

Around half of those not retired (51%) believe the minimum total contribution into workplace pensions should rise from the current 8% to 12%. Many people surveyed also believe contributions, where employees currently pay 5% of qualifying earnings and employers pay 3%, should be bolstered more by employers.

Nearly half, or 45%, think contributions should be split equally, with a further 43% arguing that employers should pay more than employees. Among those paying into a workplace pension, a third (36%) said less than 12% is being paid in

The research further showed that more than half (52%) are worried that the full state pension won't fend off financial difficulty in their later years. Meanwhile, 44% would rather see their pension savings bolster UK public services like the and education, and a majority of 54% favour backing British businesses over foreign ones.

However, 65% say that pension funds should aim for the highest returns, no matter if the investments are at home or abroad. Nigel Peaple from the PLSA commented: "Although many people are still feeling the effects of the rising cost of living, there are signs the peak of the crisis may have passed for certain segments of the population."

"While there is a desire among savers to see pension investments supporting UK companies and public services, this should not come at the cost of lower returns. Achieving the best possible returns must remain the priority, whether those investments are in the UK or overseas."

Yonder Consulting conducted this research, polling over 2,100 individuals across the UK, including both retirees and those yet to retire. A spokesperson for the Department for Work and Pensions highlighted the success of automatic enrolment in the workforce, said: "Automatic enrolment has turned millions of people into pension savers with around nine in 10 eligible employees saving for their retirement. As part of our landmark pensions review, we will explore options to expand on this success."

"More than 15 million pension savers could benefit from our new Pension Schemes Bill, with the potential for an average earner to have £11,000 more in their defined contribution pot by retirement when saving over a career."