The big news of 2020 has been the COVID-19 pandemic. It’s caused disruption in many different ways, and this is particularly true when it comes to employment and retirement.
If you’re concerned about how your pension pot has been affected by coronavirus, read on to find out what the situation is, and what action to take.
How has the pandemic impacted pensions?
The Institute for Fiscal Studies recently revealed the results of an extensive survey, exploring how the pandemic has affected peoples’ plans for retirement.
They found that one in eight individuals had altered their retirement plans due to COVID-19. The study also showed that:
- Close to a quarter of workers aged 54 or over were on furlough during June and July;
- Of those that were still working, 20% were on reduced hours;
- A third of self-employed people aged 54 or over weren’t working;
- Of the self-employed people who were working, only 20% reported that their work had been unaffected by COVID-19.
Unsurprisingly, with earnings affected, employees and self-employed workers were starting to become concerned about the future.
- 13% amended their retirement plans as a direct result of coronavirus;
- 8% stated they were now planning to retire later;
- 5% stated they were planning to retire earlier.
The reasons cited for these decisions were:
- Feeling that they needed to compensate for loss of pension funds by working for longer;
- Feeling that, if they lost their job after furlough, they’d be unemployable, and may as well retire early.
Should you be worried about your pension?
There’s no denying that the pandemic has had an impact on the stock market. This in turn will affect some people’s pension pots; especially those that are placed in higher-risk investments (e.g. some SIPPs products).
However, it’s important to keep in mind that the situation is unlikely to be permanent. The stock market can be volatile, and typically rises and falls in response to world events like Covid-19. Most experts agree that withdrawing pension funds prematurely, or making any knee-jerk decisions regarding retirement plans, isn’t advisable at this time.
Exploring options
Remember that there are plenty of options available when it comes to your finances. For example, diversification might be a good choice at present, and there are advantages to creating a more diverse investment portfolio.
It’s worthwhile taking financial advice and finding out what your options are.
Avoiding scams
Unfortunately, unscrupulous firms are preying on pension panic, and encouraging individuals to invest in new pensions – which, don’t exist. At the very least, the company you’re dealing with should be registered with the FCA – many aren’t.
Planning for the future
If you’ve got concerns about your retirement and want to make sure that every penny of your savings is working hard for your future, get in touch with Elevate Financial Services today. We’ll go through your pension and other savings with you, then offer impartial advice on how best to invest for your retirement years. To find out more, call us on 0203 8131 495.
A PENSION IS A LONG TERM INVESTMENT, THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN. YOUR EVENTUAL INCOME MAY DEPEND UPON THE SIZE OF THE FUND AT RETIREMENT, FUTURE INTEREST AND TAX LEGISLATION.