A recent poll* conducted by WEALTH at work found that 84% of respondents think employees have changed their retirement plans in light of the pandemic.
Jonathan Watts-Lay, Director, WEALTH at work, comments;
“The pandemic has affected nearly all of us and not least those employees who are approaching retirement. It therefore comes as no surprise that nearly all of those polled believe that employees have changed their retirement plans in light of the pandemic.”
He explains; “There are a couple of reasons for this. Firstly, redundancies have led to many individuals deciding to retire early and therefore access their pension for perhaps the first time. In fact, according to a survey by LV more than 154,000 people aged 55-64 have opted for early retirement because of redundancy and reduced income.
Secondly, some have found that they have to delay their retirement plans to rebuild their pension pots that have been adversely impacted by market fluctuations. A poll by YouGov found that 13% of over 55s are planning to delay their retirement, whilst a Fidelity study suggests 38% of people will put back retirement by around two and a half years.”
Watts-Lay adds; “Employees who are facing retirement are probably feeling concerned if they can afford to do so at the moment. However, financial education could help them realise that they could use the tax-free cash from their pension to pay off any outstanding loans and mortgages, and without these debts they may not need as much as they think to afford retirement.
For organisations that are making redundancies, affected staff should receive appropriate support so they understand how it will impact their finances, including how to budget, manage debt and cut down on spending and bills. Support will also be needed around understanding how much of their redundancy pay will be received after tax, how to make it last if they don’t get a new job quickly, or how retirement could be an affordable option when perhaps they thought it wasn’t.”
He comments; “With many retirement plans up in the air, financial education, guidance and access to regulated financial advice is needed now more than ever. Many leading employers and Trustees are putting robust processes in place to ensure that this support is available for the workforce. This can help employees become more financially resilient and lead to better outcomes for all. ”
*Statistics quoted are from a poll carried out on the ‘WEALTH at work’ website and through the WEALTH at work LinkedIn page from May to June 2021. The poll asked, ‘Do you think employees have changed their retirement plans in light of the pandemic?’ and received 51 responses. To see the full results, please click here.