The medical, social and financial impacts of the pandemic have been far reaching. Some people who are recovering from COVID are left with prolonged symptoms, leading to a diagnosis of ‘long COVID’. Similarly, from a financial perspective, many people have lost earnings, but economic recovery could help restore their financial health and wellbeing. Unfortunately, a minority could suffer the financial equivalent of long COVID.
During the past eighteen months, Legal & General has monitored the financial effects of the pandemic, with a particular focus on the long-term impact on the future pension income of workers aged over 50. Last August, only 2% of this age group were considering reducing their pension contributions. Eight months on, in April this year, the research highlighted that 12% of workers over 50 were actually paying less into their pension pots because of the financial disruption caused by the pandemic, severely impacting the retirements of one-in-eight (about 1.7m) 50-plus workforce members. By way of example, L&G cites, ‘A 50-yearold opting out of a workplace pension could be £50,000 worse off by the State Pension age of 67 if they never opted back in and continued working full time throughout.’
The message is clear – anyone, whether over the age of 50 or under, who has economised on pension contributions during the pandemic, should restore them as soon as they can, as Andrew Kail, CEO of L&G Retail Retirement, concludes, “Although current circumstances are proving challenging, we would urge those who have already saved something for retirement to maintain their contributions. Pausing them may be tempting, however people should explore every possible alternative before considering this. Prioritising enrolling back into the scheme as soon as possible, to limit the losses and take advantage of the tax breaks, is also advisable for anyone who has already stopped.”