Covid-19 has wide reaching impact on retirement plans
- The pandemic is forcing a widespread rethink of retirement plans as just under 1 in 5 (18%) report a change to their target retirement age
- 20% of over 55s who hadn’t accessed their pension pre crisis have since taken out money from their pension (12%) or are considering doing so (8%) because of the pandemic
- The self-employed are particularly affected with 2 in 5 (40%) forced to rethink retirement plans, and 22% now expecting to delay retirement
The coronavirus crisis has thrown the nation’s retirement plans up in the air, with 18% of the general population saying they now plan to delay retirement. Aegon research carried out among 2000 people reveals that the retirement plans of the over 55s and the self-employed are being particularly impacted by the pandemic.
One in eight (12%) of those aged 55 and over who prior to the coronavirus crisis hadn’t accessed their pension funds have now done so and a further 8% have considered dipping in.
Self-employed workers have been particularly affected with 40% saying they have been forced to reassess their plans for retirement. 22% of people in this group now plan to put off retirement because of the uncertainty caused by the pandemic.
Despite being decades away from retirement age, figures show that one in five (21%) of those aged 18-34 expect to delay the age of retirement. 11% of those aged 35-55 said that they plan to delay retirement.
Steven Cameron, Pensions Director at Aegon said:
“The coronavirus crisis is impacting on every aspect of our lives, affecting individuals’ financial situation and for many, their plans for retirement. Our research shows that the over 55s and self-employed are set to be hit hardest as many are forced to reconsider plans for the retirement they had hoped for with a significant number now opting to dip into their pension pot earlier than they may have planned.
“Those who are self-employed and employees who have been furloughed, particularly those at or nearing retirement age are most likely to have had plans to retire thrown up in the air. We hope the impact of the coronavirus crisis on their finances will be temporary and they’ll be able to get their savings plans back on track in the not too distant future.
“For those over age 55, the pension freedoms offer extensive freedom and flexibility in how they access their defined contribution pensions, but this can be a double-edged sword. It’s positive that people have the option to use retirement savings intended for later life earlier to reflect their situation. But just because you can access pensions early doesn’t mean you should.
“It’s concerning to see a significant number of individuals accessing pension funds earlier than planned with others thinking about this. While this may alleviate short term financial pressures, it leaves less of a retirement fund to provide an income throughout what can be decades of retirement. Taking larger amounts out of pensions can also mean paying more income tax and it may be better to consider dipping into other savings first.
“It’s always important to think ahead to retirement and plan for the future, and even more so as we face up to the coronavirus crisis. We encourage people not to rush into making life changing financial decisions and to first seek financial advice or support from the Government’s Money and Pensions Service.”
*Opinium surveyed 2000 adults between the 15-19th May 2020
Notes to Editors
- In the UK, Aegon offers retirement, workplace savings and protection solutions to over three million customers. Aegon employs around 2000 people in the UK and together with a further 800 people employed by Atos, we serve the needs of our customers. More information: aegon.co.uk
- As an international life insurance, pensions and asset management group based in The Hague, Aegon has businesses in over twenty markets in the Americas, Europe and Asia. Aegon companies employ approximately 26,000 people and have millions of customers across the globe. Further information: aegon.com
Figures correct as of November 2019