COVID-19 puts retirement plans of millions in doubt, survey finds

More than three million people have reduced or completely stopped their pension payments as a result of the COVID-19 pandemic, new research has revealed.

A study from Scottish Widows suggested that 10% of UK adults who have a pension and are not yet retired will need to work for longer, or significantly increase how much they save later on, in order to make up the shortfall. Those who don’t could face pensioner poverty in later life.

The research, conducted during lockdown among a total of 2,251 adults, considered how the crisis is impacting the short and long-term personal finances of the nation, revealing that almost a quarter of workers (24%) are worried about paying for essentials like food and energy. Another 20% are concerned about paying rent or affording their mortgage.

In total, the research showed almost one in five (19%) suggested they have seen their income fall because of coronavirus, and Scottish Widows also indicated the short-term financial concerns were impacting long-term saving, with 10% of adults reducing pension contributions, or stopping savings completely.

Scottish Widows head of policy, Pete Glancy, commented: “The COVID-19 crisis has revealed a painful lack of financial resilience in the UK, leaving millions of people exposed with little or no safety net to fall back on.

“As the full impact of this crisis becomes clearer, more people may feel forced to pay for today’s essentials with tomorrow’s savings. However, this will only prolong the economic pain of coronavirus and could result in more people facing poverty in retirement.”

Scottish Widows has previously called for a single lifetime savings pot to be introduced, which it believes would help people better withstand financial shocks, such as a fall in income, while still saving enough for a comfortable retirement.

“Introducing a single lifetime savings pot would allow flexible access to savings during times of financial hardship,” Glancy added.

“Not only would this have supported people struggling with the impact of coronavirus, but could also help crack the lifetime savings puzzle at the same as building longer term financial resilience. The next time that a crisis hits, more families could avoid being forced to choose between security today and protecting tomorrow.”

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