An increase in the attention given to bridging pensions has been an “unexpected result” of the coronavirus pandemic, according to Aon.

The pension provider revealed that half (50 per cent) of the 124 pension professionals it polled in a recent webinar said that they were interested in bridging pensions as a way of offering flexibility in their defined benefit pension schemes.

Aon said it had also seen increased interest in bridging pension from clients, whilst over one in ten (12 per cent) said that they already had the option available in their schemes.

Bridging pensions give members the option to access more of their pension savings at an earlier stage of their retirement, as well as enabling them to take a bigger tax-free cash lump sum.

Kelly Hurren, head of member options at Aon, said the lockdown period had resulted in “an increase in people reviewing their personal finances”, noting that the increased interest in bridging pensions “may well be a product of that” as people wonder how to span the gap between their retirement and reaching State Pension age.

She added that, while nothing had actually changed in bridging pensions, they can enable a “potentially smoother set of payments across retirement” and a “bigger tax-free cash lump sum”.

Hurren commented: “The likelihood of recession and with it, the prospect of more people taking early retirement – or, sadly, finding they need to take it as a result of redundancy – means scheme members are becoming increasingly aware of the need to cover a financial gap that could stretch for 10 years or more.

"Others may simply be looking for increased flexibility – perhaps to help family members financially."

The news comes as Aegon research revealed that almost one in five (18 per cent) of the general population plan to delay their retirement due to the impact of the coronavirus crisis, further indicating how the pandemic has challenged peoples' retirement savings.

Hurren concluded: “It may well be a sign of the times, that we have seen a sudden rise in interest both on our webinar and actively from clients wanting to exploring this option.

"Flexibility has been a keynote for pension schemes in the last few years and now – given the economic circumstances we are facing – it may be that both schemes and members are thinking alike and looking to explore what flexibility is possible and how it can improve both the scheme and personal circumstances.”

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