A RURAL insurer is urging farmers and those who are self-employed to update their pension contributions - after two years of high inflation. 

NFU Mutual says many farmers use pensions as an 'alternative income stream' later in life once other generations are taking over the farm. Research conducted by the insurer found that 77% of farmers now have pensions, which is up from 66% four years ago. 

According to the Bank of England's inflation calculator, £100 five years ago is equivalent to nearly £125 today. SO NFU Mutual says this means farmers and the self-employed may not naturally increase their pension contributions, which means they may be vulnerable to a shortfall later in life. 

Martin Ansell, pension expert at NFU Mutual, said is it 'crucial' that farmers reviews their contributions during periods of high inflation. 

“Employees who sacrifice a percentage of their pay into a pension will automatically have their pension contributions increased with pay rises," he said. 

“But farmers and the self-employed need to change their contributions manually by telling their pension provider or financial adviser.

“If you have always put a certain amount into a pension, consider increasing it by a small percentage in order to help combat the impact of inflation. 

“It can be a positive step over the long-term, and outweigh the temporary effects of high inflation.”

The NFU Mutual research has shown that farmers are more likely to put money into a pension on an ad hoc basis, rather than with regular monthly contributions. 

“Farm profits can be cyclical and sometimes irregular," Martin added.

"Our research shows that farmers are more likely than others to make ad hoc payments into their pensions when it suits them instead of monthly contributions.

“While we know this approach will work for the finances of many farms, it’s important those ad hoc payments aren’t forgotten about or farmers could risk a financial shortfall in later life.”