Pension WARNING: UK savers in their 50s ignored as £20,000 wiped off average pension pot
MORE THAN two-thirds of savers have not been contacted by their pension firms during the coronavirus pandemic despite a fall in markets and savers in their 50s are facing an average loss of £20,000 to a defined contribution pension pot.
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According to consultancy PensionBee, many people looking forward to retiring have been forced to push back plans amid fears of the pandemic. Many have received no support from their pension providers.
Only one in 10 said they have received support when making any decisions about their pension.
But others said the only information they had received was a warning there would be an increased delay to enquires during the lockdown period.
Romi Savova, of PensionBee, said: “The coronavirus pandemic has brought about increased levels of economic uncertainty, a growing number of job losses and a lack of clarity about what the future holds.
“It is, therefore, more important now than ever for pension providers to provide the support and guidance that savers deserve.”
As the UK went into strict lockdown back in March, many people have changed their retirement plans.
For savers in their 50s, nearly £20,000 was wiped off the value of the average defined contribution pension pot, figures from wealth manager Quilter reported.
Pension firm Legal & General estimated there would be 1.5million workers aged 50 or over deferring their retirement and work an additional three years.
They found workers who had been furloughed or received a pay cut were the most likely to delay retirement.
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PensionBee found members received minimal communication from their pension providers even under normal circumstances.
Two-thirds of those looking to retire have never received any information from their provider about how they can access their pension.
During lockdown around seven million people have taken action regarding their pension, according to Aviva.
This could include reviewing their investments, checking the value of their pension or changing the amount they pay in.
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As the UK went into lockdown, millions of people were made jobless and the government launched the successful furlough scheme.
However, while the support is considered as necessary given the problems that coronavirus has caused, experts within the field have warned that Britons' savings and even pensions could be raided to pay for it all.
Lee Clark, a Financial Planner at Brewin Dolphin, said: “We will now wait to see how we will all pay for this expensive but necessary economic stimulus.
“Those who can afford it, with the deepest pockets, whether companies or individuals, will likely be asked to shoulder at least their share of the burden.
“Our advice, for those that can, is to use this year’s tax allowances, including pension tax relief on their contributions.
“There has already been press speculation about wealth taxes, although Boris Johnson denied any intent to introduce one during prime minister’s questions shortly before the summer statement.”
While the Prime Minister rejected the idea of a wealth tax, it's been suggested that a kind of wealth tax will likely be introduced under a different name to cover the national expense.
Tom Elliot, a Senior Investment Strategist at Mattioli Woods, theorised on how this all could be paid off: “Paying off this sharp rise in public debt will dominate fiscal policy over the coming decade.
“It won’t be long before taxes do rise, to ease the pressure, but it will be a long time before normality returns to public finances and deficits return to low single figures.
“Until it does, UK public finances are highly exposed to the vagaries of the bond market, which includes fear of inflation, over-supply and - if sterling falls further - a sell-off by foreign owners, who own around a quarter of all gilts.”