Older savers halting contributions amid Covid-19 could see pension losses of nearly £100,000

Over-50s who have stopped saving into their pension in light of Covid-19 could be £98,680 worse off by the age of 75 if they fail to start saving again, according to analysis by Legal & General (L&G) Retail Retirement.

The group's research found that those aged 50-59 have reduced retirement savings by an average of £165 a month amid financial pressures stemming from the pandemic.

It stated that, for many people in the UK, reductions of this size equate to opting out entirely, with “no idea” on when savers will resume payments.

The group highlighted the value of re-introducing pension contributions as soon as possible, noting that whilst a saver could lose £98,680 from their pension if they were to never resume contributions, this falls to just £2,517 if they resumed after 6 months.

Opting back in after one year meanwhile, would reduce the amount lost from the individuals retirement savings to £4,274, whilst three years would see a loss of pension savings of £12,738.

L&G Retail Retirement CEO, Chris Knight, emphasised that the pandemic has thrown "millions" of people's retirement plans off course, inevitably pushing many of those facing financial struggles to opt-out of their workplace pension.

Knight highlighted previous L&G research which showed that 1.5 million workers aged over 50 will delay their retirement as a direct result of the Covid-19 pandemic, being most likely for workers who had been furloughed or taken a pay cut during the pandemic.

He added: "These are of course challenging times, but while it may be hard to look past current difficulties, it is important not to lose sight of the long-term benefits of saving into a pension to secure a comfortable retirement.

"Despite current circumstances proving challenging, we would urge those who have already saved something for retirement to maintain their contributions.

“Pausing them may be tempting, however people should explore every possible alternative before considering this.

"For those who have already taken the difficult choice to opt-out, our projections highlight how vital it is to prioritise enrolling back into the scheme as soon as they are able to do so, to limit the losses to their retirement fund.”

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