Rising unemployment figures reported by the Office for National Statistics (ONS) likely indicate a reduction in people’s ability to save for retirement, according to Aegon.

The number of employees on payroll dropped by more than 600,000 between March and May, according to early indicators shared by the ONS, while 2.8 million people were claiming work-related benefits, an increase of 126 per cent.

The non-ministerial department added that the number of job vacancies in May had fallen to a record low of 476,000, 342,000 fewer than the previous quarter and 365,000 fewer than a year earlier.

The three months to April 2020 saw total pay fall in real terms for the first time since January 2018, while the total number of weekly hours worked in April dropped by 8.9 per cent compared to the same point 12 months prior, down to 959.9 million.

Aegon pensions director, Steven Cameron, said: “While the government’s furlough scheme for employees and the self-employed income support scheme have provided much needed temporary support during lockdown, today’s employment figures offer an early indication of jobs already lost.”

Cameron noted that weakening employment “could have a significant impact on the nation’s retirement prospects as job losses often comes ahead of a fall in people’s ability to save”.

He added that recent Aegon research showed that some parts of the workforce were experiencing “a large reduction in their savings capacity, with furloughed employees and the self-employed the hardest hit”.

The analysis by Aegon found that (18 per cent) of the general population plan to delay their retirement due to the impact of the coronavirus crisis, with this number rising to 40 per cent among the self-employed.

Close Brothers Asset Management head of investment services, Robert Alster, also warned that it seems unlikely that all furloughed workers will return to their jobs.

"It may be some time before hiring in the hardest hit sectors begins to pick up, sectors that were the engine of employment growth in the wake of the global financial crisis,” he added.

Alster commented that it might not be until October and the end of the Job Retention Scheme “that the reality of the UK job market will become apparent”, adding that business’ ability to defer staffing decisions due to government support would “not continue indefinitely”.

Cameron concluded: “While the government’s immediate focus will rightly be on supporting earnings, questions remain over the impact on people’s savings prospects and long-term financial wellbeing.”

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