The COVID-19 pandemic is causing Britons to reconsider their retirement plans, and an increasing number of them are holding back contributions to their pension plan, which will likely force some to spend more of their life working than they had anticipated.
According to a survey of more than 2,000 UK pension savers conducted by British insurance firm Aviva, retirement plans have been significantly impacted by the pandemic and corresponding lockdown as 11% of respondents said they have decreased or stopped contributions.
“The ongoing COVID-19 pandemic has caused financial difficulties for many, and for thousands of middle-aged people, retirement plans are likely to be put on hold,” Alistair McQueen, Aviva’s head of savings and retirement, said in a statement. “As savings plans are likely to take a hit due to sweeping changes to circumstances, many are now facing the possibility of having to work for longer to enable their finances to catch up.”
According to the findings, 10% of workers aged 45-55 have said the financial impact of COVID-19 has caused them to delay their retirement plans, while 46% of Britons aged 45 to 54 currently lack confidence in their financial situation, compared with 38% of all adults.
“While it may be concerning to see COVID-19 rattle the market, long-term investors—like pension savers—should be careful not to overreact,” McQueen said. “Volatility in the stock market is normal and markets often rebound quickly, and decisions made in haste and under stress are rarely good ones.”
Aviva also found that men have been more likely than women to check their pension value and investments by 27% to 18%; however, they were also more likely to have decreased or stopped pension contributions altogether by 13% compared with 8% for women.
“While it’s good practice to pay close attention to their finances, this shouldn’t necessarily mean they need to take action,” McQueen said.
The firm said that more people have used their additional spare time during the pandemic to think about their finances, with 29% of UK adults saying they are now reviewing their spending habits more often and 16% of UK adults saying the lockdown has prompted them to think about their pension more often. Approximately 37% of pension savers have taken action relating to their pension during the lockdown so far, according to Aviva.
“Some have taken time during the lockdown to pay closer attention to their pension performance and savings habits which is very promising to see,” McQueen said. “It is vital that this behavior becomes the ‘new normal’ post-lockdown, as savers face the challenge of funding their needs in later life.”