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C-19 crisis impacts fifth of retirement plans

16 June 2020

Nearly a fifth of people plan to delay their retirement due to the impact of the Covid-19 crisis, research from Aegon has revealed.

According to the pension provider, 18% of the population expect to make changes to their retirement plans, with the self-employed hit particularly hard. 

Two fifths (40%) of self-employed workers said they have been forced to reassess their plans for retirement, with 22% stating they plan to put off retirement because of the uncertainty caused by the pandemic. 

Meanwhile, one in eight (12%) of those aged 55 and over who had not accessed their pension funds prior to the outbreak have now done so and a further 8% have considered dipping in. 

The research found that younger generations were not immune to the effects of the crisis either, with one in five (21%) of those aged between 18-34 and 11% of those aged between 35-55 expecting to delay the age of retirement.

Steven Cameron, pensions director, Aegon, said: “Those who are self-employed and employees who have been furloughed, particularly those at or nearing retirement age are most likely to have had plans to retire thrown up in the air. We hope the impact of the coronavirus crisis on their finances will be temporary and they’ll be able to get their savings plans back on track in the not too distant future.

“For those over age 55, the pension freedoms offer extensive freedom and flexibility in how they access their defined contribution pensions, but this can be a double-edged sword. It’s positive that people have the option to use retirement savings intended for later life earlier to reflect their situation. But just because you can access pensions early doesn’t mean you should.”

Cameron said it was “concerning” to see a significant number of people accessing their pension funds earlier than planned, warning that it would leave less income through decades of retirement and could result in individuals paying more income tax. According to Cameron, it “may be better” to consider using savings first.

He added: “It’s always important to think ahead to retirement and plan for the future, and even more so as we face up to the coronavirus crisis. We encourage people not to rush into making life changing financial decisions and to first seek financial advice or support from the Government’s Money and Pensions Service.”

Professional Paraplanner