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More than a tenth of staff are cutting their pension contributions or stopping them altogether

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More than one in 10 employees (16%) have reduced the amount they contribute to their defined- contribution pension scheme or stopped saving altogether.

A poll from Prudential shows over the next 10 years 27% of people expect to use state pensions and their own savings to fund their retirement, compared with only 22% this year.

But the Pru's research shows that a 25 year-old who joins a defined-contribution pension scheme this year - with employer contribution - can expect an annual retirement income in 2049 of £16,023, compared with the £57,714 annual income they would receive in a defined-benefit scheme.

More than two in five staff who plan to retire this year (42%) have their savings in a defined- benefit pension but over the next 10 years this figure is set to drop to 35%, the research suggests.

This is because of the rising number of defined-benefit schemes being closed to new members - 49% in 2005, 50% in 2007 and 53% in 2008.

Prudential's director of defined contribution solutions, Martyn Bogira, said: "Although it has been well-documented that final-salary schemes are in decline, our research has not shown a corresponding increase in defined-contribution scheme participation, which implies people are reducing contributions or stopping paying into pensions altogether. This is a disturbing development.

"With the growing body of evidence suggesting the state pension will be inadequate for many people in old age and with final-salary schemes disappearing, now is the time for people to take advantage of the pension schemes that are available to them.

"Company pensions really are the bedrock of a financially secure and rewarding retirement."