Millions of workers’ retirement plans paused due to pandemic
A study by the investment company found that the planned retirement age for furloughed workers has been put back by two-and-a-half years, as millions of people have been forced to delay their retirement plans.
Based on HMRC figures of those furloughed, a potential 3.6 million workers have had to make changes to their retirement plans, with this figure likely to grow.
According to Fidelity’s figures, a third (32%) of these workers intend to ‘phase into’ retirement instead of stopping work on a set date, while 6% have delayed their retirement completely, and 19% remain unsure about the future, putting any decision making on hold for now.
For the furloughed workers that plan to phase into or delay retirement, the pandemic has already pushed their retirement age back by an average of two-and-a-half years.
A third (33%) want to save more money in case they need to fund long-term care, while 31% say the activities they had planned are on hold, so it makes sense to keep working.
A similar proportion (29%) need to work for longer to recover lost retirement savings. Out of this group, three in 10 (29%) also need to support their adult children or other family members financially.
Fidelity found that even with these changes to some people’s retirement plans, 37% of non-retirees still believe they won’t have enough money to enjoy the retirement they’d like.
More than two-fifths (41%) of those in their 30s and 40s said they don’t think they will be able to fund the retirement they would like, while many people in their 20s also had concerns about being able to save enough for a comfortable retirement.
Maike Currie, investment director at Fidelity International, said: “Worries about saving enough for retirement were present long before the pandemic, but the events of 2020 which have continued into the new year, have catapulted people’s pension concerns.
“Workers have been forced into rethinking their retirement plans as they re-examine their personal finances and savings against the backdrop of Covid-19. Out of necessity, some have had to reduce or cut their pension contributions altogether while they prioritise concerns over day-to-day spending.
“With furlough extending through to April and a national lockdown announced at the beginning of the year, it’s likely more people will revisit their financial plans, as jobs and earnings remain uncertain.
“We will see the retirement ramifications of the pandemic for many years to come and we need to act now to support people with their long-term savings goals. The research shows saving for retirement needs to be simpler, more inclusive and adaptable. Pensions desperately need to keep pace with the changing demands of modern-day life if we are to keep people motivated and engaged.”