15 Sep 2021
4 million over 50s workers are continuing to save less towards their retirement when compared to before the pandemic - with £3,283 lost on average
Those who have cut savings are now putting £155 less monthly towards retirement, however at the peak of the pandemic contributions dipped by more than £200
Legal & General Retail Retirement (LGRR) analysis suggests this reduction in payments could delay the retirement of someone who saved less by more than four years (based on the median average) if contributions remain at reduced levels.
Financial outcomes can be returned to pre-pandemic levels and LGRR encourages people to 'Spend A Day' on retirement this Pension Awareness Week with its course with The Open University
Over 50s workers in the UK could have a £5.3 billion hole in their collective pension pot due to cutbacks on retirement savings over the course of the pandemic, according to new research from Legal & General Retail Retirement (LGRR) 1.
The new findings, released as part of Pension Awareness Week, estimate that approximately 10% of pre-retired over 50s - 1.4 million people2 - are continuing to save less every month when compared to before the pandemic. At present, those over 50 saving less have reduced their monthly savings by £155 a month, however at the peak of the pandemic this was an average of £219 less a month. Overall, over 50s saving less towards retirement will have contributed £3,283 less on average over the course of the pandemic than they otherwise would have.
Over 50s workers who are continuing to save less are doing so for a variety of reasons, such as pay decreases (39%), redundancies or job losses (22%) and the impact of being furloughed (13%). One in five over 50s saving less (20%) have also had to reduce their retirement contributions in order to provide more monetary support to their loved ones.
Retirement planning course with The Open University
To help those approaching retirement understand their options - and manage their financial affairs better in later life - Legal & General has a free online course with The Open University, setting out a series of stepping stones to a financially secure retirement.
The introductory 4-hour course combines guidance, short videos and tools and covers various aspects of retirement planning, from how to budget for retirement, how different types of pensions work and what to do if pension income is at risk of falling short.
It's completely understandable that those who have faced financial hardship as a result of the pandemic may have looked for opportunities to cut back on their outgoings. However, as our research shows, saving less, particularly for those in their 50s, could have a significant impact on retirement prospects and planning. Our own analysis suggests that those who have saved less would, based on the median average, need to bring their contributions back to pre-pandemic levels, then pay an additional £41 per month to make good on their shortfall. If the same saver does not bring their contributions back to pre-pandemic levels they might need to delay their retirement by more than four years to reach the levels they previously would have saved before cutting back on their monthly contributions.
As we look ahead towards a period of recovery, the best thing people can do is commit to spending a day sorting through their affairs to better understand the options at their disposal, rather than burying their head in the sand. To encourage people to do this, we offer a range of resources, including a free online course that can be completed in an afternoon. Our hope is that by encouraging older workers to engage with their later life finances, growing numbers will be equipped with the tools to enjoy a more comfortable retirement.
Emma Byron, Managing Director, Legal & General Retirement Solutions