Millions of people have abandoned saving into pensions in the past year to bag an extra £550 or more in annual take-home pay to meet rising fuel and food bills.
The aim of pensions saving is to smooth lifetime income across lifetime expenses. Some portion of this year’s income is put aside to cover a year when not working.
So, real income changes this year – prices change relative to wages. The amount to be put by to smooth income from working years over non-working years changes.