PENSION savers have been warned that the lockdown crisis which has held the UK in a firm grip is likely to have a particularly detrimental effect on their savings, and could leave them with a diminished pot for retirement.
Pension saving has been drastically affected by the COVID-19 crisis in the UK, and regular saving has been thrown up in the air. This is due to the difficult financial circumstances many are facing, alongside furloughing and job losses reducing salaries across the country. It is important to note recent research has proved the severe effect the crisis is likely to have on the savings of many people in the UK, who may not have enough for the retirement they planned.
A survey undertaken by Fidelity International has shown 51 percent of the UK’s pension investors will now not have enough money to meet their original retirement needs.
People have reported a significant fall in the value of their savings as a result of COVID-19 which is likely to have implications later down the line.
This is being described as a “pensions blackhole,” with shortfalls impacting the original plans of savers.
The survey asked nearly 800 investors who are yet to retire their original plans, and how their investments had been affected.
Nearly two thirds of those who are planning to retire within the next five years have seen their investments fall, creating concern.
Of those who are now having to confront a pension shortfall, 36 percent said they would continue to work full-time.
Another 35 percent said they would consider taking on part-time work to cover their costs.
An additional 18 percent said they would have to rely upon financial support from their partner to cover their losses.
However, 29 percent stated they would in fact have enough to cover their retirement, meaning not all pension savers are affected by the market dips.
Maike Currie, investment director for workplace investing at Fidelity International, commented on the findings.
She said: “While the market has recovered some of these losses, for many the impact will be far longer lasting, with half of investors reporting a pension blackhole impacting their retirement plans.
“For those nearing retirement, working for longer may not be an option they either want or can pursue, depending on their circumstances.
“Drawdown allows you to remain invested for as long as possible – benefiting from potential market recovery – while also offering you access to flexible income.
“However, always make sure you have sufficient cash or a guaranteed income – this could be your state pension, an annuity or defined benefit pot – to cover the essentials.”
Younger savers may be able to recoup the losses over time through pension growth in the future.
However, there is more concern for those who are drawing ever closer to the time they wish to retire.
These individuals are urged to consult their pension savings to analyse if there has been any market fall, and the options they can take from that point on.
Britons are encouraged to begin saving for their retirement as early as they possibly can.
While the UK has a State Pension system, this is increasingly being viewed as a safety net to alternative saving arrangements.
Workplace pension contributions can also provide a valuable top up to private pension saving.