24 March 2008

– One in ten pension savers to stop, pause or reduce their contributions over next 12 months due to the economic outlook –
– Average ‘pension payment break’ is almost two years –

Britons are putting their long-term financial future at risk by taking ‘pension payment breaks’, according to new research¹ commissioned by Brewin Dolphin, the UK’s largest independent private client portfolio manager. The study warns that one in ten (almost 2.4 million) pension savers expect to ‘stop’ (5%), ‘pause’ (2%) or ‘reduce’ (3%) their pension contributions during the next 12 months as a result of the worsening economic outlook. Those most likely to do so are aged 25-34 (over 800,000), claims Brewin Dolphin. See case study below.

Historically 20% of pension savers stop, pause or reduce their payments at some point in their working life (see Table 2). It is therefore alarming that so many intend to make changes to their pension contributions within the next 12 months. Brewin Dolphin believes that this is a reaction to the current economic turmoil. The findings also support recent research from the FSA, which found that 20% of mortgage holders were worried about meeting their repayments in the next twelve months².

The average length of time for those who have paused or reduced their pension payment is almost two years (22 months), with 13% doing so for more than five years, says Brewin Dolphin. The findings show that of the people spoken to; those living in Scotland are likely to pause their contribution for just 11 months compared to those from the South-East and East-Anglia who do so for around 27 months. Women are more likely to pause or reduce their pension payments than men.

Charlotte Black, Director of Corporate Affairs at Brewin Dolphin, commented:

“Given tighter credit conditions it seems likely that pension payment breaks will become increasingly prevalent as the immediate pressures of servicing mortgages and dealing with credit card debts take their toll. This will result in a further depletion of pension pots that have already suffered by the Government’s decision in 1997 to remove tax credits on dividends in pension funds. Even the shortest payment break could have serious consequences for the income a pensioner has in retirement.”

Beverley Lavin Pension Specialist at Brewin Dolphin added:

“Cutting pension contributions is always a false economy and will certainly cost you much more to replenish your funds in the future, than you will save in the short term. My recommendation is always to focus on pensions for the longer term.”

Case study

A 32-year-old man aiming to retire at 58 and saving £400 a month into his pension fund (which is currently valued at £40,500) could expect a £791,760 pension pot in 2034. However, if he stops paying into his pension for a year, the pot would be worth just £756,201 – a saving of £4,800 today, but leading to an eventual loss of £35,559.*

*Brewin Dolphin has developed a Pension Calculator – principally designed to show the impact of the removal in 1997of dividend tax credits on individual pension funds – and now with an enhancement to show the cost of taking breaks in pension contributions. For the Assumptions used by the calculator and in the case study above please use the link below.

http://www.brewindolphin.co.uk/PensionTaxCalculator/Default.aspx

Additional findings

Over the next 12 months, people living in London (12%) are the most likely to stop, reduce or pause

their pension contributions, closely followed by the South East and East Anglia (11%).

Table 1: Pension holders, who are planning to stop, reduce or pause their contributions in the next 12 months

Source: Brewin Dolphin, February 2008

Table 2: Reasons why people have stopped, reduced or paused contributing to their pension scheme

Source: Brewin Dolphin, February 2008

– Ends –

Notes to editors:

1. 2057 adults were interviewed online by research company TNS. Fieldwork was conducted between 5 th and 11 th February 2008.
2. http://www.fsa.gov.uk/pages/Library/Communication/PR/2008/018.shtml

For further information:

Charlotte Black, Director of Corporate Affairs
Brewin Dolphin Securities
020 7248 4400 or Charlotte.Black@brewin.co.uk
Beverley Lavin – Director Financial Planning
020 3201 3330 beverley.lavin@brewin.co.uk

Patrick Evans / Alistair Kellie / Ewan Robertson
Citigate Dewe Rogerson 020 7638 9571

About Brewin Dolphin

Brewin Dolphin Limited (“BD”) is the principal operating company of Brewin Dolphin Holdings PLC which is listed on the London Stock Exchange. BD is authorised and regulated by the Financial Services Authority and is a member of the London Stock Exchange.

BD is the largest independent private client investment manager in the UK. The Group manages £21.6 billion of funds for over 120,000 clients, and of this £10.7 billion is on a discretionary basis. BD has 39 offices and is corporate adviser to 131 corporate and 100 institutional clients. Brewin Dolphin Investment Banking was voted AIM Broker of the Year 2007.

The Group provides complete investment management for private investors, charities and pension funds and trades as:

Brewin Dolphin in England, Wales and the Channel Islands
Bell Lawrie in Scotland and Northern Ireland
Stocktrade is the BD Execution-Only division. www.stocktrade.co.uk

Please see Media Centre section on www.brewindolphin.co.uk for details and photos of all commentators and analysts throughout the BD Group.