By Oliver Smith on Wednesday 13 May 2020
Average monthly contributions spiked 40 per cent in April, as prudent savers redirect more cash into their pensions.
Digital pension provider PensionBee saw another sharp change in savers behaviour this April, with withdrawal rates now dropping below its 2019 figures.
Last month the online provider saw withdrawals down 33 per cent year on year, and withdrawal sizes falling from £10,900 in 2019 to £8,200 last month.
Its tax year-end contributions were up over the same period by 40 per cent, with average monthly contributions in April at £1,752, up from £1,225 in April 2019.
“It is evident that consumers have become more prudent in an era of increased uncertainty, and where possible they are saving more and spending less,” said PensionBee CEO Romi Savova, who’s speaking at the AltFi Digital Summit 2020 this Friday.
Savova pointed to falling everyday expenses on things like commuting and eating out as part of the reason why customers are directing more of their disposable income into their longer term savings and pensions.
“For those in retirement who are withdrawing less, prudence may be driven by apprehension about future spending requirements in the context of a weaker economy,” she said.
“We would encourage customers who have a larger disposable income to continue saving, and for those in retirement to keep as much of their pension invested as possible to ensure they’re well positioned to benefit from the eventual economic recovery.”
PensionBee’s figures also showed a 24 per cent spike in first pension transfers, indicating that for many people this period of lockdown is the ideal time to sort out their finances.