COVID-19 affects retirement plans for over three million

Posted by siteadmin on Thursday 1st of October 2020.

COVID-19 affects retirement plans for over three million

 

Recent research shows 1 in 10 UK adults with a pension (and not yet retired) have reduced or stopped pension contributions because of Covid-19.

  • 1 in 10 UK adults have reduced or stopped pension contributions
  • 1 in 4 workers are worried about paying for every day essentials
  • 1 in 5 workers are worried about keeping up with mortgage or rent payments

The economic fallout resulted in a drop in income for many people meaning them having to decide between their short-term financial needs and long-term savings. The research revealed that almost a quarter of workers (24%) are worried about paying for essentials such as food or energy and a fifth (20%) are concerned about paying mortgage or rent.

Greater impact for those already struggling to save
Research has shown that the groups most affected financially by COVID-19 are those groups who may already be struggling to save for retirement: self-employed, younger workers (18—24 – year olds), women and part-time workers.

2 in 5 self-employed workers (43%) have seen their income drop and as a result almost one in five have needed to pause or reduce their pension contributions. This compounds an already existing problem with the self-employed being unable to save adequately for retirement – figures from 2019 show that 41% of the self-employed workforce were not saving anything for retirement.

The nation’s youngest workers are also likely to reduce their pension savings and of this age group, 7% were found to have moved their pension into lower-risk funds, despite being years away from retiring.

Another group already struggling to save are women, who are generally more likely to be in part-time employment or lower-paid jobs. Part-time workers also tend to be less well prepared for retirement and have been harder hit through job losses and furloughing than full-time workers, resulting in them being more likely to change their long-term savings habits than full-time workers (15% versus 6%).

Here to help


If you are considering reducing or stopping your pension contributions, contact us for help in reviewing your options. If you have already taken this step, it is important to review your retirement savings as soon as your situation improves. We are here to help and give you sound financial advice tailored to your individual needs.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

KEY TAKEAWAYS
  • One in 10 UK adults, with a pension and not yet retired, have reduced or stopped pension contributions because of the pandemic
  • Savers are having to decide between their short-term financial needs and long-term savings
  • Almost a quarter of workers (24%) are worried about paying for essentials such as food and energy and a fifth (20%) are concerned about paying their mortgage or rent
  • Those groups already struggling to save for retirement including the self-employed, younger workers (18 to 24-year-olds), women and part-time workers have been found to be most affected financially
  • Two in five self-employed workers (43%) have seen their income drop, almost three times the proportion of employees (16%)
  • The self-employed are unable to be included in auto enrolment
  • 18 to 24-year-olds are likely to reduce pensions savings and 7% have moved into lower-risk funds
  • Women and part-time workers have also seen a greater impact on their ability to save
  • Contact us to review your options if you are thinking of changing your pension in any way
  • If you have already done so, as soon as your situation improves, we can help you review your retirement planning.

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