A recent report from Canada Life suggests that one in ten employees in the UK have frozen their pension contributions during the COVID-19 pandemic potentially reducing their future pension savings by thousands of pounds.
With the UK economy gradually recovering from the coronavirus pandemic and employees steadily returning from furlough and back into the workplace, pension experts are warning the public that those back in work must now refocus attention on their pensions and recommence paying pension contributions.
Partner and Actuary at Quantum Advisory, Stuart Price, is using this Pension Awareness Day (15 SEPT) to encourage the public to re-engage with their pension obligations and ensure they are saving enough to enjoy a comfortable retirement.
Stuart said: “The news that so many employees have chosen to stop paying into their pensions during the COVID-19 pandemic is understandable but also really very worrying and in years to come could spell a future pension crisis if they do not recommence their contributions.
“I think that a lot of people still think the State Pension will see them through retirement, which is simply not the case. Given the financial cost to the Government of reacting to the COVID-19 pandemic, it is very likely that in the future, State Pension Age will increase further and/or the amount of State Pension will reduce as the Government looks to rebalance its books.
“Even paying the minimum auto-enrolment contributions into their pensions – currently 5% for employees and 3% for employers – will not provide a huge pot at retirement for individuals. The reality is, people need to be saving as much as they can afford over a sustained period. However, any further auto enrolment contribution increases to the minimum amounts should be introduced gradually so as not to undo the positive results the scheme has already achieved – and now might not be the best time for increases.
“I understand some people are unsure about pension savings, but they shouldn’t be. With Pension Awareness Day taking place, I would encourage everyone to carry out research, seek guidance, ask questions and understand what position they are in when it comes to saving for their retirement. Whether that is through their employer, the government or a financial expert, planning for your retirement should not be put off and the sooner you can start, the bigger impact it could have on allowing you a comfortable and enjoyable retirement.”
