Over a third of furloughed workers change retirement plans amid Covid-19

Nearly two-fifths (38 per cent) of the 3.6 million workers who have been furloughed have made changes to their retirement plans as a result of the Covid-19 pandemic, according to research from Fidelity International.

The survey found that furloughed workers are also seeing their retirement age pushed back by up to two and a half years, with a further 37 per cent of workers still uncertain about their ability to afford their desired lifestyle in retirement.

The findings follow the latest data from the Office for National Statistics, which revealed that member contributions to funded occupational defined contribution (DC) pension schemes had fallen by 11.2 per cent between Q1 and Q2 2020.

Commenting on the research, Fidelity International investment director, Maike Currie, said: “The double drop of 11 per cent and 5 per cent in employee and employer contributions, respectively between the first quarter and second quarter last year highlights the significant impact Covid-19 has had on people’s finances.

“It’s understandable that given the short term pressures many have been under during this period that they may have felt inclined to either pause or scale-back their pension contributions last year.

“However, doing this can have a significant repercussions on people’s long term finances."

She added: “Looking ahead, employers need to be on the front foot when it comes to supporting their staff’s retirement decisions. After months of contributions being paused, workers need to feel confident about either restarting or reassessing their pension plans for the future”.

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