Retirement crisis looms as millions of pension savers could see £72,000 wiped from their pots

More than a third of British adults with private pensions have reduced, paused or completely stopped their contributions after experiencing major life events.

What many savers view as a short-term interruption can have severe long-term consequences for their financial security in later life.

A study from Standard Life demonstrates that even brief gaps in pension saving can substantially erode retirement funds.

The most damaging scenario involves a fifteen-year hiatus from age 30 to 45, which would strip £72,000 from the final pension, leaving just £138,000 for retirement.

Annie Clarke, 60, began saving into a pension at age 23 after encouragement from her parents and help from a cousin who was a financial adviser. "I just paid into it. I was very lucky," she said, adding that at one point her cousin even told her she needed to save more of her salary.

However, financial pressures after she married in 1994 meant she stopped contributing for long periods. "We just didn’t have any money. Any spare money we used to do up our house. We didn’t even think about our pension," she said.

Annie said she briefly restarted pension contributions but had to stop again as family finances became strained. "I started paying in again but then finances got too tight once more. Life and children came along so the contributions stopped."

As a result, Annie – who now runs her own bookkeeping business – estimates she spent around 15 years not saving for retirement. The long gap meant missing out on years of growth and compounding in her pension pot.

It was only after her divorce in 2007 that she realised the impact. "I didn’t even give it a second thought during that 15-year period," she said, adding that it took someone close to challenge her. "It took someone – probably my father - to say, 'What are you doing?'"

Her experience is not unique, with new research showing many people face pension gaps after major life events. One in seven people who pause contributions do so for more than five years.

Career breaks, including maternity leave, emerge as the primary trigger for pension disruption, affecting 45 per cent of those who take time away from work. Redundancy ranks as the second most common cause, with 44 per cent of those made jobless reducing or stopping their retirement savings.

Moving into self-employment prompts a third of workers to halt contributions, while roughly one in five parents pause payments after having children. On average, savers who interrupt their pension contributions do so for approximately two years.

However, the duration varies considerably depending on circumstances, with those who become parents typically pausing for two years and four months, while redundancy leads to the shortest average break at one year and four months.

Standard Life's calculations reveal the stark financial reality of these interruptions for someone beginning work at 22 on a £25,000 salary making minimum auto-enrolment contributions.

Such a worker could accumulate roughly £210,000 by age 68, accounting for inflation and charges. A typical two-year break between ages 30 and 32 would reduce this sum by £10,000, leaving £200,000. Extending that gap to five years would cost £25,000, bringing the total down to £185,000.

A decade without contributions between 30 and 40 would slash the pot by £49,000 to £161,000. The biggest impact comes from a 15-year break between the ages of 30 and 45. This would cut £72,000 from the final pension pot, leaving just £138,000 for retirement.

The financial burden falls unevenly across different demographics, with women significantly more likely than men to halt pension payments after starting a family, at 27 per cent compared to 16 per cent.

Younger workers bear the brunt of these disruptions, with roughly a third of Gen Z and Millennials having paused or reduced contributions following life events, versus just 16% of Baby Boomers.

Despite these challenges, 62 per cent of those yet to retire remain confident they can recover lost ground.

Mike Ambery, Retirement Savings Director at Standard Life plc, said: “Life rarely follows a straight line - and pensions don’t either. Life events such as being made redundant, managing long-term illness, starting a family, or taking time out are simply part of how people actually live, and it’s completely normal for retirement saving to pause during those moments.

"The challenge is that pensions build over decades, so even relatively short gaps can have a bigger impact than people expect. A pause might feel temporary at the time, yet it can have a lasting impact if contributions aren’t restarted.

Mr Ambery added: "Everyone’s journey to and through retirement can be better, and the encouraging news is that small steps can make a real difference. Restarting contributions as soon as possible can help rebuild momentum.

"From there, gradually increasing payments when income rises, using part of a pay increase or bonus to boost pension contributions, and checking the full employer contribution available through a workplace scheme, can all help empower people to engage with their financial futures and help them get back on track to achieve better outcomes and greater financial security in later life."